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Options for Lender and Tax Foreclosure Properties

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By : John Cutts    99 or more times read
Government-controlled mortgage corporation Freddie Mac is setting up a scheme, called Real Estate Owned Rental Initiative, that would allow renters and previous owners of foreclosed homes to stay in the properties as renters on a monthly basis. Freddie has also announced it is again extending its foreclosure moratorium until the first day of April to give more time to homeowners to weigh their options under Obama’s program.

These options given by Freddie Mac to their borrowers are considerably much better compared to options given to former owners of tax foreclosure properties. Homeowners are given only 10 days to settle their tax liabilities before their homes become tax foreclosure properties.

Virginia-based HomeSteps, the real estate unit of Freddie Mac, will operate the rental scheme. It will implement the scheme with the help of property management companies that run operations across the country.

According to Ingrid Beckles, vice president for default asset management at Freddie Mac, the REO Rental Initiative will lessen the hardship experienced by families during foreclosures and will give borrowers more time to evaluate the best option for their families. The initiative will also help prevent neighborhood blight by keeping properties occupied and maintained. If tax foreclosure properties are also lessened, then there would be fewer properties left unoccupied and less properties contributing to blight.

Mortgage lenders nowadays are more open to options regarding their foreclosed properties because of the decline of the housing market. With more and more lender and tax foreclosure properties in the market, home prices have been falling to bottom levels, prompting homebuyers to wait for further declines before buying. This March, property management companies notified by Freddie Mac will start contacting renters and previous owners of foreclosed homes about the options available to them. Some previous owners of tax foreclosure properties can study other options offered by Freddie Mac and find something that could apply to their situation.

Another help being offered by Freddie Mac is its relocation assistance. If distressed homeowners do not want to rent, they will be helped with some cash for their moving out. Freddie will also try to work out other options with the occupants after foreclosure proceedings are completed and after its gets back title to the properties. Meanwhile, the only option available to previous owners of tax foreclosure properties is to redeem their properties from buyers who have purchased their properties within a specified period.

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