There are now a variety of options for renters whose landlords face foreclosure- but the renter doesn’t always know it:
Despite anti-foreclosure initiatives by the government and lenders, the housing crisis has continued to worsen. Foreclosure notices totaled a record high of nearly 938,000 in just the third quarter of this year, according to RealtyTrac, an online foreclosure database. The Center for Responsible Lending predicts a total of 9 million foreclosures by 2012. Vacant and abandoned foreclosed properties are adding to neighborhood blight problems. Renters increasingly have become caught as innocent bystanders, evicted often without notice when their landlord faces foreclosure.
The new federal protections are supposed to address that. But in some cases, tenants in foreclosed homes either can’t reach real estate agents in charge of selling the properties to let them know they want to continue renting, or they get incorrect information from agents and think their only option is to move out immediately, said Shelley White, litigation director at New Haven Legal Assistance in Connecticut. In some instances, law firms send misleading letters that imply a financial incentive to move, known as cash for keys, is a renters’ only option, she said.
“We’re definitely seeing a lot of problems with tenants that just get notes from Realtors that say the bank has foreclosed on your property, and it’s time to get out,” Wright said.
How does a renter know what their options are? Great question. I’ve got one answer- work the phones. Find out who owns your loan. Contact them. Ask a lot of questions. If you don’t like the answers you are getting, wait 30 minutes and call back- you might get a different one. Work the internet. There’s information out there like this article on Fannie Mae’s webpage.
Programs are changing all the time as the government fights to keep people in vacant homes. If you haven’t checked in a couple of weeks, your options might have changed.
Information is power, and there is no need for renters to be powerless.
Twist,
I thought there was a law passed that the renter has 90 days to vacate in a forclousure. I’ve had a few people tell me that it was passed but I’m not sure.
I would also recommend that tenants contact their local HUD-Approved housing counseling agency. Although most are set up to handle calls from owners – - many should be able to answer basic questions about timelines and resources for renters as well.
Here in Minnesota, the MN Home Ownership Center oversees the statewide network of foreclosure prevention counselors, and we have information for tenants in a foreclosure situation as well. http://www.hocmn.org.
Richinaz, I believe you are referring to the ‘Protecting Tenants at Foreclosure Act of 2009′ law. In summary, it gives until the end of the current lease, or 90 days to vacate.
I’m a renter and have had to deal with this in Las Vegas a couple of times. Renters should monitor the county recorders office, at least where I live, all the default notices are posted there.
Also beware of this scam: Upon foreclosure, several realtors came by pretending that they represented ‘the owner’ and attempted to get us to turn over the keys.