Fannie To Extend Moratorium On Foreclosure Evictions; Freddie Mum On Further Action

The Wall Street Journal reports:

• Fannie Mae is finalizing a national policy that will allow tenants to remain in their homes even if their landlord goes into foreclosure -- a landmark decision for tenants. The policy will be in effect Jan. 9, Fannie Mae said Sunday, and reflects growing pressure on the mortgage company from a legal-aid group that threatened to sue over recent evictions. The company said it will also ensure its current holiday moratorium on new evictions is being followed until the new policy takes effect.

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• In late November Fannie Mae and Freddie Mac said they would suspend tenant evictions temporarily during the year-end holidays. [Connecticut legal aid firm] New Haven Legal Assistance said that despite the pledge, Fannie Mae was proceeding with more than a dozen new eviction cases in Connecticut. The advocacy group said the evictions would violate legislation passed earlier this year to rescue the two mortgage-finance giants that required them "to permit bona fide tenants who are current on their rent to remain in their homes under the terms of their lease."(1)

• In his letter Sunday to the New Haven group,(2) Fannie Mae General Counsel Curtis Lu wrote: "As far as we know, this will be the first nationwide program of its kind." [...] Freddie Mac hasn't announced a similar policy reversal, though a spokesperson said they are "currently evaluating additional actions."

For more, see Fannie Mae to End Tenant Evictions in Foreclosures.

(1) Section 109(b) of the Emergency Economic Stabilization Act of 2008 may require the U.S. Secretary of the Treasury to work with the F.H.F.A. and other government entities to permit tenants in foreclosed homes to remain in their apartments after foreclosure.

(2) Fannie Mae General Counsel Curtis Lu was responding to a December 8, 2008 letter sent by New Haven Legal Assistance, demanding that FNMA immediately cease violating Section 109(b) of the Emergency Economic Stabilization Act of 2008. ThetaTenantRentSkimming