Deed for Lease Program

Fannie Mae has announced yet another program to try to help struggling homeowners get through the current recessionary crisis – this one is call the Deed for Lease program. Bob Hunt did a good review and analysis of the program on the RealtyTimes Web site – see http://tiny.cc/O5V0T .

Obviously there are people back in Washington flailing about for anything that might help people during this mess. In this case the program is aimed at trying to keep people from being displaced from their homes, even as they are losing the home to foreclosure. I’m sure that there are those who would say “the hell with them”, they messed up; throw them out of the house and move on with life. Perhaps that’s what the banks would like, too – to just get the problem with these people behind them and move on.

Bob makes some very good points in his article about testing these various programs for viability – asking the question, “Is this likely to work?” In the case of this program and the earlier HAMP (Home Affordability Modification Program) aimed at encouraging loan modifications for delinquent homeowners and even the new HAFA (Home Affordability Foreclosure Alternatives) program, the answer is likely NO. These are all well intentioned programs created by Washington bureaucrats without enough analysis or consultation with lenders. They don’t work because the numbers don’t make any sense for anyone involved – either they are too low for the lenders or too high for the homeowners.

Many of these half-baked ideas seem designed as much as anything to give the Washington folks some press release opportunities – opportunities to say to the public, “See we’re doing something back here.” One big missing ingredient is all of these programs is any ability to sort out the deadbeats from the honest citizens who have fallen on hard times. The banks don’t have the time and staff to try to do that, so they have to treat everybody pretty much equally, which is to say pretty shabbily. There was a saying on the Jack’s Winning Words Blog recently that probably applies to these programs too - “The truth is that many people set rules to keep from making decisions.” (Coach K). People create programs for that reason, too.

So we have yet another program, this one with the cute acronym D4L, which is creating more false hope that something can be done by government to stem the tide of home losses during this downturn. I suppose that, if these programs each require that the government hire a few more people to administer them, we can look at them as a part of the jobs program that the administration is also pushing. They can call that J4E – Jobs for Everyone. Oh, stop me before I give them more cute ideas!