Fannie Mae Sticks Up for Tenants — But Will Banks Follow? « The Washington Independent
Fannie Mae’s decision to stop evictions for tenants for foreclosed buildings is a big victory for renters. People who paid their landlords on time and did absolutely nothing wrong often still found themselves out on the street, and without the proper legal notice.
Fannie Mae hopes banks will follow its lead. But it’s not clear that will happen, the Wall Street Journal says.
From the Journal:
Ted Meyer, a spokesman for Deutsche Bank, one of the biggest trustees of mortgage-backed securities, said Deutsche Bank isn’t in a position to be able to follow Fannie’s lead on foreclosures.
Deutsche Bank has no capacity to intervene, Mr. Meyer indicated, saying “the whole issue comes down to ownership” of the foreclosed properties. A given property “is held in trust by us but it is effectively owned by the hundreds or thousands of people that own a tiny sliver of mortgages in any one pool,” Mr. Meyer said.
It might fall to the local servicers of the mortgages to decide to halt evictions, he added, because they are responsible for steps such as hiring real-estate agents to put foreclosed properties on the market. It isn’t clear how much power — or will — a servicing company has to effect a moratorium on tenant evictions.
None of that sounds promising. Sounds like investors once again are in control, just as they are for loan modifications, and they may not go along with this. It’s time for the government and lenders to stop throwing up their hands and saying they can’t do anything, because investors won’t go along with it. If they won’t begin cooperating voluntarily with efforts to stop foreclosures and evictions, then it may be time to legislate that they have no choice. That’s not always the best approach, and it no doubt will make the industry howl.
But investors leave lawmakers with little choice. It’s the outcome they’ll have earned, for putting so many people out on the street.