January 30, 2009

Freddie Mac turns to rental options

The Federal Home Loan Mortgage Corp. said Friday it would offer month-to-month leases to qualified U.S. homeowners facing eviction due to a foreclosure.

The REO Rental Option is intended to help cushion the impact of foreclosures on families who own or rent homes with Freddie Mac-owned mortgages, Chief Executive Officer David Moffett said in a statement.

At the same time, keeping foreclosed properties occupied and in better repair will support local property values and promote a faster recover in the housing market, he said.

The leases would be offered at market rents or the rent amount they were paying prior to foreclosure, whichever is less, Freddie Mac said.

Freddie Mac said it would offer leases to tenants and former owner-occupants with adequate income. The homes must also meet applicable building codes. If not, the leases will be offered if the home can be affordably brought into compliance, the statement said.

Freddie Mac said it would still pursue loan modification options to allow homeowners to retain ownership of their properties.

We want to ensure there is one last effort to achieve a workout, said Ingrid Beckles, senior vice president of default asset management at Freddie Mac.