Hats off to Robert Dogget for uncovering Fannie’s moves…

The Neighborhood Stabilization Program (NSP) was established to stabilize communities that have suffered from foreclosures and abandonment.

NSP authorizes recipients (states, nonprofits and others) to acquire foreclosed properties and then resell them to qualified buyers.  Recipients target certain areas that have concentrations of foreclosures in order to stabilize the rest of the neighborhood using NSP funding.

One requirement of NSP is the seller of the foreclosed property (often a lender) must certify it has complied with the Protecting Tenants at Foreclosure Act (PTAF).  HUD Guidance here.  Description of PTAF here — essentially the law requires owners of foreclosed properties to honor leases of bonafide tenants (or give at least 90 days notice to vacate if the lease is expired).  If the seller refuses to certify compliance with PTAF, the recipient can still acquire the property for the program but they must attempt to determine whether PTAF was complied with.  Only if the recipient believes PTAF was complied with AND ASSUMES THE LIABILITY IF IT IS WRONG, can the recipient can acquire the property using NSP funds.  HUD Guidance here.

Recipients such as the state of Texas have focused acquiring properties from Fannie Mae since it is the largest lender in the world and undoubtedly has one of the largest portfolios of foreclosed property.  It is also worth mentioning again that Fannie Mae is under the control of the federal government at present.

Not surprisingly, Fannie Mae refuses to certify it complies with the Protecting Tenants at Foreclosure Act (PTAF).  Again, Fannie Mae refuses to sign a document saying it has complied with the law, a document required for participation in the federal Neighborhood Specialization Program (NSP).

Fannie tells us that they are PTAF compliant because they are doing all they can.

And what is the effect of lenders like Fannie Mae refusing to certify compliance with PTAF?  Texas reports that the PTAF certification is hands down the number one problem with implementation of the program — a program designed to get eligible families into affordable homes, while stabilizing neighborhoods.  So while Fannie Mae sits on its hands and lets its henchman push tenant families out of their homes illegally, it smartly refuses to certify compliance and shove the liability to others interested in stabilizing their communities.

If you are representing a landlord or tenant that is facing a foreclosure situation call our office today at 713-595-8200.

- The Bank Slayer