I don’t qualify for loan modification, now what? On November 5, Fannie Mae announced its new Deed-for-Lease Program (D4L) that allows eligible borrowers facing foreclosure (or their tenants) to stay in their primary residences.
Under D4L, the borrower transfers ownership of the property to the lender through a deed-in-lieu of foreclosure and the borrower (or the tenant) signs a lease for up to 12 months. The program is designed for borrowers who don’t qualify for other workout solutions, including modifications, or who do not meet their obligations under the modification. The purpose of the program is to minimize displacement of families and deterioration of neighborhoods that often occurs when homes are left vacant. The rent may not exceed 31 percent of the family’s gross income. Fannie reserve the right to market the property during the lease term and may sell it to an investor subject to the lease.
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