Fannie gives renters a break

Mortgage finance company Fannie Mae said Tuesday that it had adopted a policy allowing renters to remain in their homes even if their landlords entered foreclosure.

The policy would allow residents of about 4,000 properties to sign new leases with Fannie Mae while the properties are up for sale. Michael Williams, Fannie Mae’s chief operating officer, said the change should “help bring a measure of stability to communities impacted by high foreclosure rates.”

Fannie Mae had indicated last month that it was planning to do so. Sibling mortgage finance company Freddie Mac is working on a similar policy, company spokesman Brad German said.

But Amy Marx, an attorney with New Haven Legal Assistance in Connecticut, said Freddie Mac has continued with evictions of renters in recent weeks.

“We are thrilled that Fannie Mae has done the right thing,” she said. “Our hope is that Freddie Mac will follow their lead.”

New Haven Legal Assistance and two other legal aid organizations in Connecticut represent seven tenants facing eviction on properties whose loans are held by Fannie Mae or Freddie Mac. The legal groups contend that the financial bailout legislation passed in October requires the companies to allow tenants to remain in their homes.

Some households, Marx said, haven’t been notified of Fannie Mae’s policy change by the real estate agents charged with selling the properties.

Fannie and Freddie said last week that they would extend a suspension of foreclosure sales and evictions from single-family homes through the end of January. The companies had suspended foreclosures through the holidays.

The government-controlled home loan giants say the extension will allow borrowers facing foreclosure to keep their homes as they work to modify more loans.

Fannie Mae, based in Washington, and Freddie Mac, based in McLean, Va., own or guarantee about half of the $10.6 trillion in outstanding home loan debt in the U.S.