Renttoday.us on Fannie Mae Tenant in Place Program

FANNIE MAE, wha huh? Who the heck is that anyway and why do I care?

Wow! What a week it’s been here at the Renttoday.us offices and it’s only Tuesday!!! As you know, there’s always something new and exciting going on in the strange, drama-filled world of property management but this week we had the honor of participating in the Fannie Mae “T.I.P.” rental program which stands for Tenant In Place meaning if you are a tenant in a Fannie home….you may get to just keep your little butt exactly where it is and have none other than Ms. Fannie Mae as your landlord….well, sort of. What am I talking about? Well, we all know Fannie, right? But for those who’ve been living under a rock, are completely self absorbed, or just never watch the news or pick up anything heavier than an US Weekly, let me give you the reader’s digest version (oh, and if you are not familiar with that reference either…Readers Digest was this weird little mag from the 70’s that had short little stories about random stuff)…let’s move on. The Federal National Mortgage Association (FNMA) or as we lovingly refer to as “Fannie Mae” just so happens to be the largest mortgage purchaser in the United States but probably in the world. Between Fannie and her bro Freddie (Federal Home Loan Mortgage Corp) who basically does the same thing, they own more than half of all the mortgages in the country! Pretty insane, right? What’s even more insane is that both of them basically went out of business due to all the foreclosure stuff going on a few years back but somehow they are still around. How is that you say? Well, Fannie and Freddie (along with GM, AIG, Citi, JP, Wells, Chrysler, Goldman and a countless list of others) were part of the whole “too big to fail” crew who received billions and billions of dollars in government bail out money AKA, our tax dollars via China…whatever. Anyways, Fannie and Freddie were pretty important so Obama gave them just a little help in the way of 125 billion dollars or so to keep them afloat, buying mortgages, etc., etc. Oh yah, and even with all that dough they still lost like 50 billion of that last year so they need another little loan in the neighborhood of 15 billion or so…chump change, right? It’s totally understandable and we’re not judging…just giving you the 411 so we are all on the same page here. Ok, so now that you know who Fannie is let’s get down to what’s really goin’ on. The reason you care about any of this is because if you are a tenant living in a property that has just gone to foreclosure (and there are hundreds of thousands of you out there), your new landlord just might be Fannie Mae! Cool, right? This means you are part of history, you are right in the thick of all that is happening in the Universe, you are what college kids in Economics or Finance will be learning about a few years from now….you are a “Tenant In Place”. What does that mean exactly? If you are a T.I.P. tenant, that means that you are renting a home that has gone to foreclosure. The home went to Trustee Sale, no one purchased it at auction so therefore it reverted back to the bank who owned the mortgage which happens to be Fannie Mae. Once the home reverts back to the bank it becomes an “REO” which you may or may not know stands for Real Estate Owned. Now, in the past the normal routine was to swiftly toss the tenant out in the street as fast as you can say “REO” but those dark ages are in the past and Fannie now has a kinder, softer way of dealing with the victims of foreclosure more commonly known as tenants. And that new way is simply to let you stay! Sounds good, right? Afterall, this is where you live…where your family memories have been made…maybe even where your offspring have been conceived for goodness sake…it may be some investment mistake to the previous owner, a non-performing asset to the lender but to you it’s Home Sweet Home and we completely understand and apparently the Federal government does too. If you are relating to any of this at all you probably already have been contacted by a million different people, are completely confused, probably a little pissed off, frustrated, stressed, and cynical about your actual real bona-fide options and you may not think anyone is really on your side. And basically, all those emotions are completely valid AND the truth is…..nobody is on your side except for yourself! You owe it to yourself and your family to be educated about what your rights are and what your options are in this type of now, very common situation and be able to make whatever decision is best for you. And we think we’re some pretty stand up folks over here at Renttoday.us and are just here to shoot the straight truth as we know it….this is a “no spin zone” as our friend Bill O’Rielly likes to say (yes, we’re Fox fans…you can hate us for that). So what are your options? Ok, so this is how it works as the law states right now. When a home goes to foreclosure, you as a tenant have some very specific rights and protections. For one thing, your lease is no longer invalid after a foreclosure as it used to be! If you are in a lease at the time of foreclosure, the new owner whether it be a bank or individual must honor the remaining term of your lease in most cases. There are some exceptions but basically as long as you have a bona-fide written lease, are not related to the owner, and are paying market or close to market rent the new owner is required by law to honor that lease and allow you to stay in the home you are leasing. This eliminates the tenant being abruptly displaced at no fault of their own due to the owners foreclosure situation. This also takes the worry out of leasing a home for fear that it might be in foreclosure. You can at least have peace of mind that at the very minimum, your lease is good and you will not have to move until your lease term expires. We can’t guarantee what will happen after the term expires but you are at least good for that period for sure. What if I don’t have a formal written term lease or I’m on a month to month lease? Well, good news…they thought of you folks as well. If you are on a month to month lease and are still not the owner or the owners kin…you still have options. You can either choose to relocate and the law allows you a full 90 days in which to do so. You may choose to pay rent or not pay rent but the bottom line is that you are to be given an official “90 day notice to vacate” and no legal action can begin until that term is over. In other words, you cannot be evicted during that term for not paying your rent to the new owner. But, if you don’t leave within that time period after that they are free to start an Unlawful Detainer action. 90 days is plenty of time for you to save up some cash and find a new place so don’t take advantage of the situation…figure out what you’re going to do and do it. You may also be offered a new lease by the new owner, such as Fannie Mae is offering or you may even be offered “cash for keys” from a real estate agent who Fannie Mae hired to sell your property in the event you don’t want to stay….this is where it gets sticky. It is a bit confusing being offered so many options all at one time and more times than not, different people will be offering you different options all at once! At some point, you may feel like the most popular kid in school with all this attention but the best advice we can give you is to stay focused, make a decision and stick with it! Let’s talk a bit about the REO listing agent that may have already contacted you. These guys are not bad guys at all…they are just your every day run of the mill real estate agents who were hired by Fannie to list your house in the event its vacant or you don’t want to live there. Just know this….they don’t get paid a dime unless they get to list the home which means they do have a personal agenda (which is completely normal…we’re not judging). A vacant home is a home that sells so that is 99% of the time what their agenda will be…to get the home vacant and ready to sell. This means that even though they are required by Fannie to present you with all of your options, including the option to sign a new lease they will probably promote the idea of “cash for keys’ more than anything which means they will pay you money NOT to sign a lease and to move usually prior to your allotted 90 days. And if you want to move, then the cash for keys program is awesome! Typically, Fannie will pay you a few thousand bucks or so to vacate the home and then the agent will list it and everyone is happy. BUT, if you want to stay in the property and sign a new lease make sure you don’t feel pressured to take the cash if you truly do not want it and do not tolerate any agent telling you that you cannot stay! The REO agent is not the only person in this game and you have plenty of resources as a tenant at your disposal to consult with such as Fannie Mae themselves, the Department of Employment and Fair Housing (DEFH), HUD, local tenants’ rights groups, your attorney, etc. You can even call your friendly Renttoday.us office for a little non-legal advice on your rights (FYI: we’re not attorneys so we’re not allowed to give actual legal advice) but we do know a bit about the subject dealing with it day in and day out and all. For those who are truly interested in signing a new lease with Fannie Mae, then you are interested in the TIP or “Tenant In Place” program and it’s a very simple, pretty cool little plan. The good part is that the qualification process is basically none existent. There is no credit check, no income verification, and no deposit required! Basically, the only personal requirement is that you are not a terrorist (yep, you read that right), not related to the owner, you are indeed willing to sign a new lease, and you can come up with the first month’s rent on the spot. The rent needs to be at or around market price and you have to be willing to pay that. If you pass those few requirements….hey, you’re in! Oh yah one more thing, and the property you are living in has to be relatively free of any health or safety hazards as Fannie Mae is not interested in investing thousands of dollars into a property they have already lost tens of thousands of dollars on…I’m sure you understand. If you hear from Renttoday.us and we are babbling on and on about your new lease and we want to come to your house, blah, blah, blah…this is what we are talking about! Is it all making sense now? Great, we hope so! What we are going to do is try to qualify you for the program by simply asking if you want to stay in the home. If you say “yes” then we need to make an appointment to come see you, do a quick inspection of the home, take a few pics, have you sign the lease, and collect the first month’s rent. If we are in the middle of the month, Fannie would like you to pay the prorated amount of the current month as well as the upcoming month, too. We do need that at time of signing if at all possible and not being able to pay that right away could definitely jeopardize your ability to qualify for the program. It’s pretty simple and we normally only have 48 hours to get everything dialed in and executed so time is of the essence!! If you sign the lease and pay the rent, Renttoday.us will be your direct property management company and it’s good news because we are super nice and great to work with! You will be working with us on all issues regarding the property such as repairs, questions, rent payments, move outs, etc….we know you are very excited and so are we!! So, this blog has gone on just waaaay too long so what are you waiting for….call us back already and let’s get that lease signed! If you want to talk to someone directly about this program, about property management, Fannie Mae or maybe even just the weather feel free to call or email us anytime! All of our info is on the website at www.renttoday.us and we look forward to hearing from you