The Fannie and Freddie Foreclosure Dilemma

March 20th, 2009 by Matt DiChiara| Posted in Multifamily Foreclosures, Political Corner | 2 Comments »

Back in December we reported on some good news for renters and property managers, which was the result of Fannie Mae and Freddie Mac’s lawsuit prompted decision to allow qualified renters in foreclosed properties that have been absorbed by the GSEs to remain in their homes.

After doing some research on renters rights after the rental property is foreclosed on, we found the details of the court case that brought to light Fannie and Freddie’s ‘governmental responsibilities’ in the National Law Center on Homelessness and Poverty’s report. It appears that the GSEs, had gotten quite used to acting as private companies even as it fell under federal control.

Evelyn Colon, who had been evicted from her apartment after Fannie Mae foreclosed on the property filed a suit which claimed that Fannie Mae became a federal agency when it came under the conservatorship of the Federal Housing Finance Agency, and therefore needed to allege a good cause for any eviction. This was dictated by the Emergency Economic Stabilization Act (through which TARP funds were authorized), which required the FHFA to coordinate with the Treasury to allow tenants to stay in their homes and apartments.

What do you think? Should Freddie and Fannie be allowed to evict tenants after a foreclosure so that they can sell the property to recoup on their own losses or should they be required to operate the facility at a loss, using taxpayer dollars?