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Deed for Lease

 Fannie Mae logo  Deed-for-Lease Program Helping Families and Stabilizing Neighborhoods


Last November, Fannie Mae launched the Deed-for-Lease™ Program (D4L) to help minimize family displacement brought about by foreclosure, while fostering neighborhood stabilization. The program provides Fannie Mae's servicers with an additional tool to apply to loss mitigation efforts and allows Fannie Mae to manage its inventory of REO properties while generating cash flow until the properties can be sold. 

Candidates for D4L are borrowers (or their tenants) who are eligible for a deed-in-lieu of foreclosure and who wish to remain in their homes even after their property has been transferred to Fannie Mae. The program is ideal for families who may need more time to transition (e.g., families with children attending neighborhood schools who want them to remain there until the end of the school year). D4L also works well for tenants who want to stay in their rental homes, even if their landlord is no longer able to afford the mortgage.  

D4L is available for investor properties if it is the resident's -- either the former borrower or current tenant -- primary residence.  


Fannie Mae does not require occupants to pay a security deposit to stay in the home. Landlords usually require a first and a last month's rent to lease a property. By eliminating the need for this cash outlay, families can preserve their funds to assist them in other areas during this difficult time.  

The D4L Process

From the servicers' perspective, once a deed-in-lieu of foreclosure (DIL) candidate is identified, the D4L process is easy to follow. Servicers will need to:

  1. Pre-screen the candidate's loan type and payment history against the short list of requirements found on the D4L Referral Form (Fannie Mae Form187).
  2. Ask the borrower if he or she is interested in leasing back the property. If the answer is "yes", complete the D4L Referral Form and e-mail it to Fannie Mae's rental team to the address noted on the form.
  3. Provide the borrower with the D4L Instructions for Borrowers; Fannie Mae will handle the rest of the leasing process. Within 10 days, Fannie Mae will let you know if a lease was signed and whether the property can remain occupied.
  4. Complete the DIL according to the standard process. Please note that the D4L is contingent upon a successful completion of the DIL process.
  5. Upon receipt of the D4L Referral Form, Fannie Mae will assign a property manager to inspect the property and to meet with the borrower or the tenant. (The D4L Instructions for Borrowers outlines this process.)  


The property manager inspects the home to ensure it meets local regulations for rental properties, determines the market rate rent, and screens the tenant.

The rent payment is based on local market conditions, not the borrower's mortgage payment. Fannie Mae requires the borrower/tenant to have the income to support a 31% income-to-rent ratio; the industry standard for most markets. Given the severe price declines in many markets, the rental rates are often lower than either the former mortgage or rent payment.


If the candidate qualifies for any relocation assistance from the DIL program, Fannie Mae will pay the relocation funds at the end of the lease.


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