Current on Rent? Your Landlord’s Foreclosure Could Get You Evicted!
By Foreclosure-Fighter Staff Writer
Foreclosure is not fun. For homeowners who have defaulted on their mortgage payments and have received notice after notice in the mail warning about the impending loss of their house, foreclosure can be an enormous source of stress.
And as the United States slogs through the aftermath of the subprime mortgage market crash, millions of one-time home buyers are finding themselves enmeshed in foreclosure proceedings. But they're not the only ones suffering.
Reports from SmartMoney.com show that as many as 25% of homes bought during the housing boom of a few years ago became rental properties. This happened for two major reasons.
First, the low price of houses inspired many homeowners to purchase a second property to rent out as a source of income.
Second, many people with ARMs realized they couldn't afford the reset rates on their mortgage payments and rented out their properties in hopes of making enough money to pay the bills.
As more and more mortgages reset, landlords—voluntary or otherwise—are falling victim to foreclosure. And their tenants are suffering.
In many cases, renters are unaware that their tenant is not current on mortgage payments. Though the landlord may be receiving regular foreclosure notices, the tenant may not know until a notice comes from the bank directly to the property, demanding that the tenants vacate.
And, in many cases, tenants are only given three to five days to clear the premises, reports show. That's not much time to pack up and find a new place.
The Washington Post explains that banks are quick to evict tenants because most banks are eager to resell foreclosed properties—they don't want to deal with utilities and upkeep. And a property's value plummets if people are living there.
Laws in most states are constructed so that if a landlord is foreclosed upon, contracts with tenants are automatically voided, even if the tenants have never missed a payment. The only states where leases are not automatically cancelled after foreclosure are New Jersey, New Hampshire, and Washington, D.C.
If renters fail to leave the property in the designated time frame, the property owners can sue for eviction, sources indicate. And that suit can stay on your tenant record, harming your chances at renting future properties.
As foreclosures barrel through the nation, more and more renters who are current on their payments are finding themselves out on the streets, sources say.
Though the problem of displaced renters is becoming more widespread across the country, a few resources exist to help stranded families. Experts suggest contacting a housing lawyer or a local tenants' organization (which might offer free legal services to low-income clients) for help with renter evictions that result from foreclosure.