Mortgage Law, Mortgage Modification, and Foreclosure: Fannie Mae's Deed for Lease Program Part II
So last time we went over the major guidelines to qualifying for the Deed-In-Lieu program from Fanny Mae that allows homeowners to rent their home after "giving it back." I'd like to go over how this process works a little more in case anybody out there is looking for this kind of help.
The first step in the process is for the lender/servicer to determine if a Deed for Lease is a good option for the borrower and whether the borrower is even interested. The servicer will have to prescreen the borrower based on the qualifications outlined in the last post. If the property is tenant occupied, then the servicer should determine whether or not the tenant would like to continue to lease the property. The borrower will have to facilitate contact between the tenant and property manager, including providing the tenant’s contact information and a copy of the lease (if written). There will be a property manager assigned and they will contact the borrower directly to provide additional program details and set up an appointment.
The borrower must communicate with the property manager within five business days of obtaining the referral to set up the appointment; otherwise, the deed for lease opportunity will be cancelled. Generally the borrower or tenant should have about 11 business days for the lease to be signed and approved.
Next, the property manager will collect a non-refundable $75 lease application fee to process the deed for lease application, which includes running the background and credit check on the borrower or tenant. If a lease is approved, Fannie Mae will send an “Approval” e-mail to the servicer indicating lease acceptance and request the estimated deed for lease completion date. Fannie Mae will maintain the copy of the lease.
If a lease was approved, the borrowers execute in favor of Fannie Mae, the servicer, and their agents a general release of all claims arising prior to the acceptance of the DIL which relate in any way to the loan or the property. The servicer will not require that the property be vacant upon acceptance of the deed in lieu.
This is designed to be a much easier process than getting a loan modification. However there are still many hoops to jump through in the qualification process. If you have questions, contact us!
