Mortgage giant Fannie Mae — in what may be the first effort of its kind to provide relief for renters swept up in the foreclosure crisis — may soon become one of the nation’s largest landlords (“Fannie Mae Allows Renters to Stay,” The New York Times, Dec. 15, 2008).

Fannie Mae, which holds 55 million of the nation’s mortgages, will work with renters living in foreclosed properties and sign new leases with them rather than evicting them. Some 4,000 renters, many of whom made on-time payments to landlords, are expected to benefit from the mortgage company’s new housing initiative.

Nationally, as many as 70,000 renters are facing eviction as foreclosures hit record numbers.

“There are renters all around the country who have been holding up their end of the bargain and paying their rent faithfully, but the landlord got into trouble, and so the renter is now unfairly facing eviction,” said John Taylor, president of the National Community Reinvestment Coalition, a consumer advocacy organization. “It’s really good news that Fannie Mae is doing this. Now the question is whether the private sector will follow suit.”

Fannie Mae’s decision, the Times suggests, puts pressure on private lenders to establish similar policies, as well as on lawmakers to pass “renter relief” during the housing crisis.

Although details of the Fannie Mae program are still being worked out, the mortgage company plans to extend month-to-month leases to eligible renters until the foreclosed property is sold.

“While it may be sometimes tougher for us to sell a property when people are in it, we understand that lots of people are in tough situations right now,” said Fannie Mae spokesman Chuck Greener. “If a renter wants to stay in their home, we’ll make that happen. And if they want to move out, in many cases, we’ll help them pay for the move.”

Banks Contend They’re Not ‘Property Managers’

Current laws in many cities and states allow renters to be evicted after the homes enter into foreclosure, despite the fact that their leases are not up.

While Fannie Mae is offering a temporary solution to renters facing eviction, financial institutions such as Bank of America, JPMorgan Chase and others still abide by policies requiring the eviction of renters when a home goes into foreclosure.

“We’re not in the business of managing rental properties, and we’re not in the business of being a landlord,” said Thomas Kelly, JPMorgan Chase spokesman. “Clearly, the renter is caught in the middle in cases like this. When a property is in foreclosure, we follow the law.”

Foreclosure policies that evict renters are unfair, say lawmakers and consumer advocates.

“If your loan is owned by Fannie Mae, you get to stay in your home. If your loan is owned by someone else, you’re on the street,” said John Taylor of NCRC. “These banks need to realize they’re in the property management business now, whether they like it or not.”

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