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Innovative Programs are allowing Americans to rent their Foreclosed Homes

Since the Global Financial Crisis housing foreclosures seem to have become commonplace across America. Rising levels of unemployment have forced many people into debt, or rendered them unable to pay back loans and mortgages.

Now lenders are coming up with some innovative schemes that are allowing owners to stay in their homes.

Major lenders rent back foreclosed homes to owners

A growing number of major lenders are offering programs whereby the mortgage owner, who is typically facing foreclosure due to debt, sells the property to the lender who then rents it back to them. Besides allowing people to stay in their own homes this idea also means that land values are sustained because the homes are not vacant. Dean Baker, co – Director of the Center for Economic and Policy Research views the idea as a no brainer. He, like many others, has been pushing banks and officials to adopt the practice for years.

Lack of security in month to month lease options

Interestingly, both Fannie May and Freddie Mac have been operating similar schemes for the past three years without receiving much attention at all. However there are drawbacks with both schemes.

For example, Freddie Mac offers only month to month lease options for owners who have already suffered from foreclosure. This hardly provides the owner/tenant with a sense of security that they will one day own their own home again.

Other lenders that run similar programs now include Bank of America and CitiMortgage.

Free enrolment in eCredable

The American Equity Foundation, a non – profit that operates out of Washington DC, offers a program that is slightly different. In this case the AEF instigates a short – sale with investors and then rents the property back to the homeowners, not something that would typically occur in the case of a short – sale.

The homeowner/tenant is then enrolled for free with the credit agency eCredable to re-establish their creditworthiness and allow them to buy back the home.

Adequate employment necessary to pay rent

These innovative programs are great for homeowners faced with the prospect of foreclosure. However it may be difficult to improve their credit score if they are unable to find adequate employment while they are renting. Additionally, the lack of security provided by the Freddie Mac program means that if the homeowners/tenants are unable to continue to pay their rent then they may end up losing their home altogether.



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