Last week, mortgage giant Freddie Mac announced a new initiative to help former homeowners or renters stay in homes that have already been through foreclosure proceedings. Millions of the nation's foreclosures through private banks are for loans that have been backed by the government housing giant Freddie Mac. Through Freddie's new REO Rental Initiative, current occupants of foreclosed homes with loans backed by Freddie will be eligible to work out a deal that allows them to stay in their home. Freddie Mac's national real estate unit, HomeSteps, will negotiate month-to-month leases for interested occupants. HomeSteps began contacting residents of Freddie backed foreclosures last Thursday to determine their interest in this offer.
According to the new plan, residents will be able to stay in their homes on a monthly lease as long as they can prove that they can afford the rental amount established by the property management firm. This amount will be determined by considering current market rental rates in each local area.
This is a significant step as it shows realization that evicting residents and creating a glut of vacant homes is not best for surrounding neighborhoods and communities. Vacant homes deteriorate quickly and become targets for vandalism, crime, and squatters.
One of the requirements for occupants to remain in the home is that they understand that Freddie Mac will continue to try to sell the property while they live there and they agree to accommodate showings. However, with the severe downturn in housing prices, many homes spend months or years on the market. The government is beginning to realize that during this time it is better for everyone if the occupants remain in the home and pay rent than if they are evicted immediately.
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