Renters Innocent Victims of Foreclosures
More reports are coming in of renters who have been regular in paying their rent and yet they have become innocent victims of foreclosures. Eviction notices have been served on them because of the landlords who have defaulted. Only few days of warning are given.
According to a survey conducted by Mortgage Bankers Association, one out of every five foreclosures relates to borrowers who are not occupants of the mortgaged house. The study also brought into focus that it is the investors who allow loans to run into default rather than those who have bought houses as their first place of residence. The assumption is that the investor, being a businessperson, does not want to “throw good money after bad”. But a person to whom the house is a home will try desperately to cling to it.
There are also instances of first time investors who have purchased many properties during the housing boom period and are now facing foreclosures on all of them. The lenders too charge high rates for these risky borrowers – even more than the sub-prime rates. Realizing the situation many of these investors just walked away leaving the houses and without contending foreclosures. These moves have affected many families whose only fault was to have rented accommodation from landlords who had defaulted.
The Sheriff arrives with a foreclosure notice and forcefully evicts the occupants. Sometimes damages are demanded. Some foreclosure eviction notices hardly allow the tenants ten days notice to shift. The lenders contend that their job is not to be landlords but to make arrangements for immediate sale of the house. Any delay is costly for them. As such the house must be made vacant. The lenders also argue that the borrowers are now getting 90 days time and it is up to them to warn the tenants well ahead of the pending foreclosure.
With tenants abuse increasing the government is trying to bring in a law that will expect the new owner to extend the existing lease on the mortgaged house for another six months. Some states have already started enforcing similar laws. The tenants can now go to the courts and request for time extension.
Some of the lenders are offering financial help to the tenants to shift if they agree to do so quickly. This is known as the ‘cash for keys’ arrangement. The money involved ranges from $500 to $1,500. It is also expected that the house will be vacated in good condition.
It’s unfortunate that many times the renters are not notified till it’s too late.
[...] homes nationwide, and California makes up 20 percent of all foreclosure notices served. AND 20 percent of foreclosures nationwide relate to borrowers who aren’t the residents—which means the people who ARE affected are people like [...]