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Fannie Mae introduces new policy for those renting foreclosed property in US

The government backed mortgage company has announced a new policy which means that renters in homes at the time Fannie Mae acquires the property will be offered a new monthly lease with at market-rate rent or financial help with new housing if they opt to move.

Those eligible renters are those living in two to four unit properties, condos, co-ops, single-family detached homes and manufactured housing, Fannie Mae said in a statement.

'Renters in foreclosed properties have often been a casualty of the foreclosure crisis the country is facing,' said Michael Williams, chief operating officer of Fannie Mae.

The company has suspended evictions until the end of January which will allow for the new policy to be fully operational prior to the suspension concluding.

Fannie Mae said it will manage the properties through a real estate broker or a property management company while marketing the units for sale.

For decades, banks in the US have insisted on evicting the tenants in foreclosed properties as they regarded renters as a liability. But Fannie Mae said a change needs to happen.

'You have a family who is networked into the neighborhood, into the school system, into the job market, and it's very, very difficult to be wrenched out of that network and put on the street to look for a new place to live,' said Jason Allnutt, a vice president at Fannie Mae.

He said that foreclosure notices should include the name and phone number of the bank's attorney and tenants should call and ask if it is a Fannie Mae home and a hot line is going to be set up.

He stressed that the new policy of no tenant evictions only applies to properties with mortgages owned by Fannie Mae. For everyone else, the old rules apply but Allnutt said he hopes that Fannie Mae's no-eviction policy will be adopted by private banks that hold the lion's share of mortgages such as JPMorgan Chase and Bank of America.