Deed for Lease™ (D4L) – Frequently Asked Questions
Q1.What are the terms of the lease?
Fannie Mae will offer lease terms of up to 12 months at market rates.
Q2. How are investor properties with tenants handled?
Once the servicer determines that a borrower is eligible for deed-for-lease consideration, the servicer will discuss the possibility of a D4L with the borrower. If the borrower indicates that his or her tenants might be interested in a D4L, the servicer will provide the borrower’s contact information to the property management company. The property management company will work with the borrower to contact the tenants. If the tenants and the property meet rental qualifications, the lease will be executed with the tenants. A tenant’s failure to cooperate or meet the lease requirements will prevent the execution of a lease, but the borrower may still be eligible for a deed-in-lieu of foreclosure.
Q3.If the borrower initially says that he or she is not interested in a lease, but changes his or her mind, when is it too late to submit the request to Fannie Mae?
Fannie Mae’s property manager needs 10 business days to process the lease application. If the Deed in Lieu (DIL) completion date is more than 10 days away, we may be able to accommodate the request; however, we reserve the right to consider these situations on a case-by-case basis.
Q4. What if the borrower (or tenant) tells the servicer that he or she is unavailable to meet with the property manager during the 10- day lease consideration window?
Please indicate in the “special notes” field of the Deed-for-Lease™ Program Referral Form (Form 187) when the borrower (or tenant) will be available. We may be able to make accommodations for the schedule of the borrower (or tenant); however, the servicer must make sure the DIL completion date is scheduled to allow ten days for lease consideration taking into account the schedule of the borrower (or tenant).
Q5.
How should servicers handle questions about the lease?
Please provide the Deed for LeaseTM Instructions for Borrowers to all interested borrowers (available on eFanniemae.com). The property manager will answer all lease questions once contact is made with the borrower (or tenant). .
Q6.What if the servicer discovers that the borrower does not meet the eligibility requirements after referring the borrower for D4L consideration?
If the servicer discovers that the borrower does not meet all the screening requirements – for example, a second lien on the property or other title issue is discovered – please complete the Deed for Lease™ Cancellation Form (Form 188) and e-mail it to the address on the form.
Q7.What is the OFAC check requirement?
The Office of Foreign Asset Control (“OFAC”) of the Treasury Department administers and enforces economic sanctions programs primarily against countries and groups of individuals, such as terrorists and narcotics traffickers. OFAC maintains a list of specifically designated individuals, and Fannie Mae may not rent to an individual on the list. The OFAC check is handled by the property manager. Information on OFAC can be found on the Department of Treasury’s website at www.ustreas.gov/ofac.
Q8.Is renters insurance required for pet owners?
Certain pets may pose a liability threat to the tenant and the landlord. For this reason we may require tenants with pets to secure renters insurance, which includes liability coverage for pets and names Fannie Mae as an additional insured.
Q9.If a tenant occupies the property, who pays the $75 lease application fee?
Either the borrower or the tenant may pay the $75 lease application fee.
Q10.If it is a multi-unit property occupied by both the borrower and tenant(s) does one $75 check cover everyone?
No. $75 should be collected for each occupied dwelling unit. For example, if it is a four-unit apartment with four tenants, $300 will be collected.
Q11.Are sublets allowed?
No. Subleasing is prohibited by the terms of the lease.
Q12. If the borrower does not qualify for the D4L program, will the $75 application fee be refunded?
The $75 fee is not refundable. The fee covers the cost of evaluating the property and the borrower (or tenant), including any background and credit checks.
Q13. Does the borrower still qualify for any relocation assistance (Cash for Keys) if he or she agrees to the D4L?
No. Cash for Keys is intended to cover relocation assistance, and a D4L borrower is not relocating.
From: https://www.efanniemae.com/sf/servicing/d4l/pdf/d4lfaqs.pdf
Fannie Mae’s rental policy allows renters in Fannie Mae-owned, single-family foreclosed properties the opportunity to stay in their homes by signing a new month-to-month lease with Fannie Mae.
Who is affected by the new policy?
The new policy applies only to renters occupying a Fannie Mae-owned home at the time of foreclosure or deed-in-lieu of foreclosure. It does not apply to mortgagors or their immediate families.
Tenants occupying any type of single-family property will be eligible including residents of two- to four-unit properties, condos, co-op, single-family detached homes and manufactured housing, where the homeowners associations do not prohibit rentals. The policy applies to all renter-occupied single-family Fannie Mae-owned properties. Approval from the Department of Housing and Urban Development will be required on properties where the loans were insured by FHA.
What are a renter’s options?
After the foreclosure is complete, renters are offered the opportunity to either accept an incentive payment to move to other housing or sign a new month-to-month lease with Fannie Mae.
Can any renter sign a lease with Fannie Mae? What are the restrictions?
The property must meet state laws and local code requirements for a rental property and otherwise be habitable. Renters must be occupying the property at the time of foreclosure. Fannie Mae will not require a payment history or credit check, but may require a background check.
If a property or potential renter does not meet these requirements, the incentive payment will be offered as an alternative.
How will rent be established?
Renters will be charged market rate rent under the new lease. Market rates may be determined by reviewing comparable local rents, conducting a neighborhood survey or through other relevant indicators. No security deposit will be required. The company will review each instance where the market rate may require a tenant to pay additional rent and will work to reach an equitable resolution.
What if a property is qualified as Section 8 or under other rent control?
Fannie Mae will accommodate Section 8 and rent control concessions as long as the proper documentation is provided.
Will the property be for sale?
Yes, the property will be marketed for sale and may undergo repair or rehab while occupied with a renter under a Fannie Mae lease. If the property sells, the lease may be transferred to the new owner.
How will the property be managed?
Fannie Mae will manage the property through a real estate broker or a property management company. The real estate broker or property management company will coordinate property repairs and respond to any property safety issues as appropriate.
How do renters know if they are in a Fannie Mae-owned foreclosed property?
Property managers will contact occupants to notify them of their options by visiting the property or, if occupant is away, by leaving an information flyer with contact details for more information.
Does the policy apply in all locations?
Yes. Leases will be offered anywhere Fannie Mae does business and has eligible properties and tenants.
Who should I contact for more information?
Contact Fannie Mae’s Consumer Resource Center at 1-800-7FANNIE (1-800-732-6643) for additional information on the policy.
http://www.fanniemae.com/homebuyers/Rental_Policy_FAQ.pdf
If the property sells, the lease may be transferred to the new owner. The property must meet state laws and local code requirements for a rental property and otherwise be habitable.
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