February 2, 2009

Fannie Mae and Freddie Mac Announce Programs to Help Homeowners

Plans would allow those facing foreclosure to remain in properties as renters

For Immediate Release: February 2, 2009
Contact: Alan Barber, (202) 293-5380 x115

Washington D.C.- The Center for Economic and Policy Research (CEPR) applauds the decisions by Fannie Mae and Freddie Mac to help some foreclosed homeowners by allowing them to stay in their homes as renters on month to month leases.

“This move will provide relief to tens of thousands of families at very little cost to taxpayers,” said CEPR Co-Director Dean Baker. “This is a crucial first step in addressing the economic woes caused by the collapse of the U.S. housing market and other lenders would do well to follow Fannie and Freddie’s lead.”

Allowing homeowners and renters to remain in their properties while paying rent is a very sensible solution to the rash of foreclosures plaguing the nation. The Fannie and Freddie programs will help give families some security in their housing, will cost taxpayers little, and will help to slow the fall of local property values due to foreclosed and vacated properties.

A similar plan from Baker would go further and give the right to remain in a home as a renter for five to ten years, rather than the month-to-month lease of the Freddie and Fannie programs. This would provide real security of tenure. Also, if passed into law, it would provide lenders with a real incentive to negotiate terms that allow homeowners to stay in their homes as owners. Aspects of this plan have been incorporated into recent legislation proposed by Congressman Raul Grijalva (AZ).

The Fannie and Freddie programs will provide much needed relief to tens of thousands of homeowners. The adoption of a similar program by Congress would go much further to help homeowners facing foreclosure.