Kiss Housing Values GOODBYE!!!!!!
Fannie Mae (FNM/NYSE) is implementing the Deed for Lease™ Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender.
The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.
To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.
Who will want to pay 2X-3X the rate for an underwater mortgage plus property taxes and insurance when the can rent for a fraction of the cost? Who will want to pay $200K for a house that their neighbor is renting for $800 per month????
Factoring maintenance,property taxes and insurance....we are getting much closer to the point where the economic value of houses will be practically FREE!!!!!