Austin Kilgore | 01.13.09 www.dsnews.com

The nation's mortgage crisis has left streets lined with empty homes and displaced millions of Americans. Credit markets are drying up, and lenders and servicers are having an increasingly difficult time finding qualified borrowers to fill the glut of homes on the market.

It's no secret the longer a foreclosed home sits empty, the more susceptible it is to vandalism, theft, and destruction. To combat these issues, lenders are looking for new ways to generate revenue and protect their properties. One option – rent REO properties out to people that need housing.

“The current housing crisis will require innovative and bold steps by all industry leaders to ensure Americans have a stable housing market that enables affordable housing and reasonable investment returns for owners of distressed properties,” said Paul Hayman, president and founding partner of TennantAccess, a Texas company that specializes in rental and management of REO properties.

“In order to bring financial stability to the housing market, it will be essential that foreclosed homes are occupied,”

According to Hayman, leasing REO properties generates new revenue for homes that would otherwise sit empty, and when people occupy the homes, the risks of deterioration and vandalism decrease.

On Tuesday, Fannie Mae announced it will allow some renters living in foreclosed properties to stay in their homes. The renters will have a new lease with Fannie Mae, who will continue to try to sell the home. Fannie Mae will manage the properties through a real estate broker or a property management company.

“Renters in foreclosed properties have often been a casualty of the foreclosure crisis the country is facing,” Fannie Mae COO Michael Williams said. “This policy will allow qualified renters to remain in Fannie Mae-owned properties should they choose to do so, mitigate the disruption of personal lives that foreclosures can cause, and help bring a measure of stability to communities impacted by high foreclosure rates.”

Renting a REO property isn't as simple as renting out any house. Many times former occupants damage homes on their way out, or homes that have sat empty need to be brought up to snuff before they can be rented out. TenantAccess has a partnership with Field Asset Services, a REO maintenance and repair company, and FirstManagement Partners, a property management company, to help manage the REO properties it rents.

“We are extremely well positioned to deliver the complex requirements of national property preservation and property management in a consistent, centralized manner, utilizing local presence and modern technology,” Hayman said.

Renting REO properties also brings another benefit, putting people in homes. Foreclosed homes that are neglected can be a blight on neighborhoods, and populating them can help a community stabilize.

“In order to bring financial stability to the housing market, it will be essential that foreclosed homes are occupied,” Hayman said.