Fannie Mae Announces Deed for Lease™ Program

WASHINGTON, DC -- Fannie Mae (FNM/NYSE) is implementing the Deed for Lease™ Program under which qualifying homeowners facing foreclosure will be able to remain in their homes by signing a lease in connection with the voluntary transfer of the property deed back to the lender.

"The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications," said Jay Ryan, Vice President of Fannie Mae. "This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities."

The new program is designed for borrowers who do not qualify for or have not been able to sustain other loan-workout solutions, such as a modification. Under Deed for Lease, borrowers transfer their property to the lender by completing a deed in lieu of foreclosure, and then lease back the house at a market rate.

To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance may also be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31% of their gross income.

Leases under the new program may be up to 12 months, with the possibility of term renewal or month-to-month extensions after that period. A Deed for Lease property that is subsequently sold includes an assignment of the lease to the buyer.

For additional information about the Deed for Lease Program, including full details on program eligibility, please review the Guide Announcement on https://www.efanniemae.com/home/index.jsp.

Mortgage forms and disclosures
The Department of Housing and Urban Development (HUD) has made significant changes to the Real Estate Settlement Procedures Act (RESPA) regulations to ensure estimates are more accurate and to facilitate better comparisons among lenders. Although some parts of the regulation became effective Jan. 16, 2009, use of the new good-faith estimate form and HUD-1 and 1A settlement statements isn’t mandatory until Jan. 1, 2010.

The Federal Reserve Board has made some changes to Regulation Z (Truth in Lending) that affect mortgages, and more changes are coming. It created a new category of “higher-priced mortgage loans,” established new advertising standards, and will require certain mortgage disclosures earlier in the transaction. The changes take effect Oct. 1, 2009, except for the escrow requirement—which takes effect April 1, 2010, for site-built homes and Oct. 1, 2010, for manufactured homes.

The Fed also has proposed changes in the timing of mortgage disclosures and handling of corrections. Proposals on more Reg Z changes are expected later this year for all closed-end and home equity lines of credit.

In early 2009, the Federal Emergency Management Agency finally replaced the Standard Flood Hazard Determination Form, which expired Oct. 31, 2008. The updated form becomes mandatory June 16, 2009, and expires Dec. 31, 2011. Revised interagency flood insurance frequently asked questions also are expected soon. In recent years, noncompliance with the flood insurance rules has generated the most civil money penalties by federal regulators.

North Star Mortgage still offering VA, FHA and USDA mortgages with credit scores under 620 for the State of Florida

It took years of back-and-forth, but the federal government finally acted on its effort to simplify the Good Faith Estimate. In 2010 consumers will get to decide whether the government was successful or not. Starting Jan. 1, lenders will be required to use HUD’s new three-page GFE. It uses simplified language and requires lenders to state up front the loan amount, loan term, interest rate, and monthly payment. Armed with these clear and firm facts, consumers can compare lenders’ offers. HUD’s effort is also intended to protect borrowers from big surprises at the closing table. The department revised its HUD-1, so comparisons between the GFE and the final charges are also supposed to be easier to discern. In fact, HUD has imposed strict limits on how much the GFE figures can change. Some charges, like the origination fee, can’t change at all. Others like the title search fee can change but not by more than 10 percent. If the alterations exceed what’s allowed, the parties can still close but they have to fix the discrepancy within 30 days.

Changes

"Since 1974, the process families go through when they purchase or refinance a home has virtually gone unchanged. Now for the first time in more than 30 years, the housing arm of the government, known as HUD (short for Housing and Urban Development), has released the details of the new mortgage reform that will help families shop for the lowest-cost mortgage available and avoid costly and potentially harmful loan offers from predatory lenders. "