Across the country, renters are losing their homes when their landlords go into foreclosure, even if they have always paid their rent on time. But this is no longer the case for properties financed through Fannie Mae. It has a new lease program for foreclosure tenants.
Yadilka Torres took took advantage of the program, and she now has the mortgage giant as a landlord.
“This is my bedroom…”
Her apartment is immaculate - and color-coordinated. The green dishes on the dining room table match the throw pillows on the couch, which complement the decorative flower arrangement by the kitchen.
Nothing is out of place, and with two growing boys in this 3-bedroom apartment, that’s as much a testament to her parenting skills as her housekeeping.
"These are my sons. This one is 7, and the other one is 5."
Last September, Torres and her boys though they had to move. Her landlord lost the property in foreclosure, and she got an eviction notice.
“I didn’t find nothing comfortable for me, and nothing close to my sons' school, and my work neither. Everything I find was so expensive. See, I pay my rent for myself.”
After months of uncertainty, she found out she gets to stay in her apartment with a new lease -- all because the mortgage on this property wasn't held by a private bank. The foreclosure was with Fannie Mae.
“There’s a form lease which is being used in each of the states.” Amy Marx is Torres’ Legal Aid attorney. She helped challenge the eviction. “And this is also very clear that the landlord is Fannie Mae.”
Torres was one of the first tenants in Connecticut to take advantage of Fannie Mae's foreclosure rental program. Her rent stayed the same - $775 a month.
Fannie Mae Vice President Gabrielle Harrison says the policy is designed to stabilize neighborhoods and housing prices.
"This is just what we believe is in the best interest of managing the inventory that we have."
There was also some legal pressure. Last fall, Legal Aid lawyers in Connecticut pointed to a clause in the massive bank bailout legislation that said taxpayer-controlled organizations had to accommodate rent-paying tenants caught in foreclosure. Fannie Mae rolled out its policy in January.
“It's a new scenario for us, it's a new scenario Fannie Mae and it's certainly a new scenario for a tenant in a foreclosed home.”
Nick Mastrangelo manages properties for Fannie Mae. He used to only be able to offer help with moving expenses when he told tenants they had to leave. Now, he has this option to let them stay.
"It’s nice for us to know that when we go out to the property, instead of being able to identify it as a foreclosure and make them aware that they’re going to have to move, that this is something that’s an alternative.
But already, he's seen that there's more to being a landlord than just getting leases signed.
This winter, a pipe burst in the vacant apartment above Yadilka Torres' home.
“Oh, a lot of water, through the ceiling, into the kitchen," she remembers. "It was hot, hot water.”
“We shut down the water to the upper floors. We got her water restored," Mastrangelo says. "Then her hot water heater died out on her. So we had a new hot water heater put in. So they did quite a lot of work on her place on an emergency basis.”
There's another novel piece to this arrangement. Nick Mastrangelo is also in charge of finding a buyer for the property with Yadilka Torres in it.
“Whereas before, we wouldn't put the properties on the market until they were vacant. Now, we’re going to be marketing partially vacant properties.”
No one knows how long the building will take to sell, or if the new owner will want to continue renting out the first floor.
But for Yadilka Torres, her new month-to-month lease is comfort enough.
“Right now, I’m here.”
Fannie Mae has more than 300 leases in process across the country. Freddie Mac has rolled out a similar program. No private banks have followed suit.