Under the REO
Rental Option, leases will be offered to current renters on a
month-to-month basis at market rents or the rent amount they
were paying prior to foreclosure, whichever is less.
"First and foremost, Freddie Mac's REO Rental Option is
intended to help cushion the impact of foreclosure on families
who own or rent homes with Freddie Mac-owned mortgages," said
David M. Moffett, Chief Executive Officer of Freddie Mac. "At
the same time keeping foreclosed properties occupied and in
better repair will support local property values and promote a
faster recovery in the housing market."
Under the REO Rental Option, leases will be offered to
current renters on a month-to-month basis at market rents or the
rent amount they were paying prior to foreclosure, whichever is
less. The rent for former owner-occupants will be the market
rent, which will determined by the property management firm
Freddie Mac contracted to manage the program.
To qualify, current tenants and former owner-occupants must
be able to demonstrate they have adequate income to pay the
monthly rental amount. The home must also meet applicable
building codes, or can be affordably brought into compliance, to
Freddie Mac will also explore loan modification options that
may enable owner-occupants to retain ownership of their homes by
reinstating their mortgage with modified terms.
"In about half of all foreclosure sales there is no
conversation between the borrower and the mortgage servicer
about workouts. Before starting the eviction process, we want to
ensure there is one last effort to achieve a workout," explained
Ingrid Beckles, Senior Vice President of Default Asset
Management at Freddie Mac.