MyNewPlace Blog

Last week, Fannie Mae announced that it would be acting as an interim landlord for the many renters who would have had to look for new apartments and homes for rent because the properties in which they lived had been foreclosed upon.

In accordance with the Emergency Economic Stabilization Act ($700 Billion bailout), both Fannie Mae and Freddie Mac are prohibited, “where permissible" from evicting tenants. According to Amy Marx, an attorney with the New Haven Legal Assistance Association, this is a recent development; before the announcement on December 15th, Fannie Mae had been “emptying out all the properties that it has foreclosed on Connecticut."

To comply, Fannie Mae will act as an interim landlord and sign leases for about 4,000 renters starting on January 9th, but will not pursue any new evictions in the interim. This change in policy will allow renters who had been paying their rent every month to remain in their rental homes until their leases runs out.

Although sibling GSE Freddie Mac has not yet announced that its official internal policy is congruent with that of Fannie, spokesmen recently hinted that it would adopt the same policy.

The move should help renters, property management companies and the GSEs. Renters, of course, will not be caught off guard by a surprising knock at the door from the sheriff, property management companies will be employed by Freddie and Fannie to maintain the properties, and by decreasing vacancies in the rental properties, the values are less likely to plummet.

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