Tuesday, January 6, 2009

Renters: The Forgotten Foreclosure Victims

First month, last month, and security are what most renters put down. Then maybe sign a year-long lease with the owner or rental agency. But what is the status on their housing? What are the foreclosure rates? What is the ownership status? How secure are you? Big questions with no real answers? Biggest question we have is why one legal document (the mortgage) trumps another legal document (the lease) and what renters recourse is. Will they ever get their money back???

Renters need to review their rights. In New Jersey if you pay your rent on time and are a good tenant and you should be O.K- no sheriff eviction for you. But renters in other states are not so lucky. HUD has a website that says it provides state information here. Unfortunately the information is only as good as the state provides on their websites - which for some states there seems to be nothing regarding tenant rights in foreclosures.

So what happens to the 35,045,000 rental units in the U.S found here in the American Housing Survey for the United States 2007 (but watch out huge PDF). We have been unable to find actual ownership statistics, but an article from the Los Angeles Times titled Advice for renters if landlord faces foreclosure brings some new info. Lets take a look first at the Fannie Mae program -

Fannie Mae has pledged to change that with its new renter policy starting this month. The plan will allow renters living in foreclosed properties to sign new leases with Fannie while the property is up for sale, or give the tenants money to move. Fannie has yet to establish the length of the leases, and the amount of move-out assistance will vary by state and property.

Fannie Mae plans to reach out to tenants, spokesman Brian Faith said.

"Most tenants don't normally know the details of their landlord's mortgage arrangements, but we'll be contacting the tenants in foreclosed properties we own to make them aware of the option to stay in their home through a lease with Fannie Mae," he said.

The pair own or guarantee about half of the $11.5 trillion in U.S. outstanding home loan debt. Fannie estimates about 4,000 tenants live in the company's foreclosed properties and would be eligible for the plan.

So now on top of renting you have to monitor your landlords mortgage and financial status. And the choices may still be grim - pay your rent to stay and and still get evicted. Or stop paying rent to a landlord in trouble and get evicted. Lets take another look at the article -

This is becoming an all-too-familiar scenario for thousands of renters nationwide who have become the unintended victims of foreclosures. Banks are booting good tenants onto the streets with little to no notice after seizing a property from a delinquent owner, ignoring tenant leases.

Unfortunately, that's [Fannie Mae just a fraction of renters facing the consequences of a landlord's foreclosure. Renters in large complexes are probably safe because multifamily loan delinquencies are still very low. But 15 million renters, or about 40% of all renters, live in single-family homes, many of which are owned by mom-and-pop investor landlords. This is where the risk lies.

[G]et on the Internet. Find out the rental laws in your state. Some states, including California and Illinois, have recently passed legislation giving renters a grace period, ranging from 30 days and up, to stay in a property after it has been sold in foreclosure. Other states are considering similar legislation.

The lender's name or its lawyer will be on the eviction notice. Contact either one to let them know you are in the property. Find out what your options are. Will the lender let you sign a new lease? Or is the bank offering some cash assistance for moving out? Don't let the lender bully you into moving out sooner than stated by law.

You also can do a little digging into your landlord's financial situation if you are worried about a possible foreclosure. Go to the county courthouse or its website and do a rudimentary background check on your landlord.

So the United States basically has at least 15 million housing unites with a big question mark - single family rental units that fall into the gray abyss of rental housing. And renters, in many states, now have to learn their states laws regarding foreclosure rights all while monitoring their landlords financial situation.

And we know the that monitoring is not the same just within New Jersey. For those in Morris County, they can monitor their landlords 24 hours a day at home through their county website here. But many other counties (Bergen and Passaic for instance) require you to go to their county clerks office to find out. Luckily for New Jersey residents monitoring is not crucial. But others are not so lucky.

And even states and cities with good laws will be respected by lenders - right? Think again -

Probably more and more going on throughout the country. And many unfortunate victims that do not know their rights or are just scrambling to keep a shelter over their families heads.

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