Advice For Renters Facing Eviction Due To Foreclosure
Wednesday, January 7th, 2009
You’re paying your bills on time, but your landlord isn’t. Now you are the one holding the eviction notice. So what next?
This scenario is becoming all-too-familiar for thousands of renters nationwide. Unintended victims of foreclosures are dealing with problems first hand due to the failing economy. Banks are booting good tenants into the streets with little to no notice. Some banks are even seizing property from a delinquent owners, ignoring tenant leases. In some cases, families are forced into shelters for temporary housing because they have little or no savings to cover moving costs such as a first month’s rent, and a security deposit. Some landlords are not even coughing up the security deposit left by the tenants. If you, or someone you know is faced with a similar situation, there is a solution.
Thankfully 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.
Freddie Mac has also jumped on board and said it would unveil a similar program in the next few weeks. But how does a renter know if his landlord has a mortgage held by Fannie Mae or Freddie Mac?
Fannie Mae plans to reach out to tenants, spokesman Brian Faith said.
Since most tenants don’t normally know the details of their landlord’s mortgage arrangements, Fannie Mae will be contacting the tenants in foreclosed properties they own to make them aware of the option to stay in their home through a lease with Fannie Mae.
Fannie estimates about 4,000 tenants live in the company’s foreclosed properties and would be eligible for the plan.
Unfortunately, that’s just a fraction of renters facing the consequences of a landlord’s foreclosure. 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.
What should you do if you receive a foreclosure or eviction notice?
1. Call the sheriff’s department first. Find out how long the foreclosure process takes. Is it 60 days or 90 days? Knowing your timeline to work with will help you prepare for the worst-case scenario.
2. Find out the rental laws in your state. Some states, including California, 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.
3. 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.
4. If you are nervous about negotiating with the lender on your own, contact a local nonprofit housing counseling agency for help. HUD’s website lists agencies by state, or you can call (800) 569-4287.
5. The U.S. Department of Housing and Urban Development outlines tenant rights by state on its website at www.hud.gov