Fannie to help renters stay in foreclosed homes

NEW YORK -- Fannie Mae said Monday that it is finalizing a plan to help renters stay in their homes even if their landlord enters foreclosure.

The mortgage giant said it's working on a national policy to allow renters living in foreclosed properties — and who can make their rental payments — to sign new leases with Fannie while the property is up for sale. Or they could get cash to help move into a new home.

Sibling company Freddie Mac aims to have a similar plan in place by early January.

"Clearly, renters are caught in the crossfire," Freddie spokesman Brad German said.

"The goal is to provide them some stability," he said, "and not evict them as a result of another's foreclosure."

The two mortgage giants own or guarantee about half of the $11.5 trillion in outstanding U.S. home loan debt. The government seized control of the pair of companies in September.

Last month, Fannie and Freddie suspended foreclosure sales on occupied single-family homes and halted evictions of homeowners from those properties through Jan. 9.

Fannie said the move has enabled an estimated 7,000 to 10,000 families to remain in their homes through the holidays.

Yet some evictions were still occurring, said Amy Marx, an attorney for New Haven Legal Assistance Association in Connecticut, which represents several tenants facing evictions on properties held by Fannie Mae.

The group raised concerns with Fannie Mae on Friday.

"Fannie Mae had the tendency to empty these properties with no attempt before or after the foreclosure to contact these tenants," many of whom are low-income, Marx said.

"An eviction wreaks havoc on their lives due to moving costs and the lack of affordable housing," Marx said.

On Monday, Fannie said it contacted its lawyer and broker network to halt those evictions.

Fannie's new renter policy will go in effect before Jan. 9.