Renters Paying Dearly For Foreclosures

February 11th, 2008

Renters have no armour against foreclosures. Desmona Stewart with seven children has been moving from one foreclosure house to another as a tenant without knowing about it. She was given 30 days notice to move out. It was especially devastating as the notice came on Thanksgiving Day. Her pet Chihuahua Smokey looked as forlorn as her because instinctively the dog understood that with a pet, Desmona had extra problems. There is a pressure on rented houses with demand outstripping supply and many landlords do not allow pets. Pet shelters are all booked up and in any case it is traumatic for an animal. Some are having to be put away. Others are left behind to die a slow death following starvation and neglect. The Stewarts took legal advice and managed to get a 90 day extension. That did not solve the problem – only postponed it.

About 38% of foreclosed units in East Bay are not occupied by owners but by tenants. The latter group has few if not little rights. At the time of renting they did not know the inside dark story of impending foreclosure. All do not go through public records or make credit checks. Everybody is not sophisticated or capable enough to think or act upon these lines. When reality knocks on the renter then nine times out of ten the landlord cannot be located. This means that security deposit disappears with house owner.

The legal angle is that the rent agreement has been done with the previous owner and hence it has nothing to do with the new foreclosing lenders. The banks on the other hand do not want the hassle of managing tenants – they are not equipped to be landlords. Banks want to sell the houses. Sometimes banks offer money to the tenants to avoid trouble in evicting them. The author of “Mortgage Myths – 77 Insider Secrets to Saving Thousands on Home Financing” is Chip Cummings, a mortgage consultant and broker. He comments that the renters are the ‘hidden casualties’ of foreclosure.

Tenancy laws vary from state to state and in some the renters can be evicted within few days. At the help centres more and more calls are coming in from hapless renters whose only fault is that they have continued to pay rent on time. The landlords have taken this opportunity to collect the amount as long as they can by suppressing facts.