What happens to renters when home goes into foreclosure?

Our landlord has not told us the home we rent is in foreclosure. I found out through notices addressed to him in the mail and through a website listing our home in foreclosure. As it is we pay rent a month in advance and have decided to pay on time instead so that we do not lose a whole months rent if asked to leave. Sorry to say we do not trust our renter because he has not been honest with us. When this home sells, how long will we have to find a new place? Also, shouldn’t the bank be getting our rent money…especially if rent is more than his mortgage? I am really just concerned about what this means for us and options available? Anyone ever been in this situation?

By | 2013-08-26T17:18:54+00:00 August 26th, 2013|Mortgages Home Loans Interest Rate|7 Comments

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7 Comments

  1. ka52_1 August 26, 2013 at 8:55 PM - Reply

    Not sure in which state you reside. Almost all mortgage companies I’ve woked with never enter into a landlord-tenant relationship with the occupants (you) after the foreclosure sale of the premises. So that means moving. 🙁 On a brighter note I’ve seen realtors assigned to the property after the foreclosure sale approach the occupants and offer “cash for keys”…that’s right, cash in hand to move out and broom sweep clean the property thereby avoiding the need to pay the costs associated with an eviction. This scenario happens quite often here (WI) when the bank is the purchaser at the sale. If it’s a third party buyer/ investor ( think gold chain, huge pinky ring, unbuttoned collar, bushy chest hair, huge gut, goatee, terminal middle age crisis, titty bar regular, drives an escalade with a set of golf clubs in the back – I’m sorry I digress) this sort of chap will try to have you evicted in a NY minute so he can repaint and throw in some new carpeting for a quick flip. You can always call the atty. handling the foreclosure, this sort of info is usually public record anyway, and get an idea of when you need to depart. Good luck to you.

  2. Chris August 26, 2013 at 8:11 PM - Reply

    Nothing at first. You have 30 days to vacate the property. if the sheriff shows with less than 30 days notice you demand to go to court and be heard by a judge. Illegal evictions are not ok but they pay ohhh so much money when you sue. Oh and call the local news too so they can film you getting dragged out… spin is everything. If you have been given notice that you are being evicted you can review your options with an attorney but foreclosure usually trumps a lease.

    I would absolutely hire an attorney and begin legal proccedings against your landlord for breach of contract and fraud. Additionally you will probably want to place a lien on the property for the amount of your security deposit because if you don’t you’ll have to sue to deadbeat landlord for that money.

    I don’t know your state specific law but in California the law is as follows: Defaulted owners in the property after your date of possession are given three days notice to quit or pay rent. Month-to-month or less-than-one-year renters get thirty days. Renters with a lease of one year or more get sixty days to pay rent or quit.

    Good luck

  3. loanmasterone August 26, 2013 at 7:24 PM - Reply

    The rental contract you signed is not with the bank, so you should continue to pay the person you signed the rental contract with. The bank do not currently own the property.

    If the property goes to sell/auction and someone purchase the property the new owner will contact you and indicate if they want to continue rent it or they will occupy the property themselves. They should have proof that they are the new owners.

    If the property goes to sell/auction and it does not sell, it will become bank property, the bank will send a representative that will make contact with you. If this happens in all probability you will be given a date and time to move. Most banks don’t want hold over tenants.

    Now this does not mean you can not ask this representative if you can stay and rent from the bank, but don’t get your hopes up. Sometimes they say yes.

    You might also ask the representative if you may purchase the property? They might consider this also.

    I hope this has been of some use to you, good luck.

    “FIGHT ON”

  4. DakB August 26, 2013 at 6:31 PM - Reply

    I am confused you do not trust your renter? I thought you were the renter? Who are you really? If you are the tenant then a conversation with the bank is in order and if you want to stay an attorney is the best bet. You might even get to make an offer on the house. When you call the bank-speak to the loss mitigation department and tell them who you are and that you are living and paying rent to one of their customers and you want to know what the bank is planning to do. It will take about 60 days from the notice that you received for them to move forward and you should make some decisions before then. Are you going to move? Do you want to try to buy the house? You will probably get a visit from someone representing the bank soon and some of them have a program called cash for keys so they may help you to move.
    I would be looking for another place to live as well because the bank will usually put the house into a loss mitigation specialists hands and they may be a REALTOR who wants to sell the house so you can see, you may be needing a new place soon. Talk to a mortgage broker and see where you are financially if you want the house. Good luck

  5. I_Love_McRedneck August 26, 2013 at 6:22 PM - Reply

    The two safest things to do are to either move asap or hire an attorney. Chances are, the mortgage company probably doesn’t know the house is being rented out. At some point, they’re going to change the locks on the house & then everything inside becomes an asset that they can sell to get their money back – you don’t want to be stuck in that situation.

  6. Tim August 26, 2013 at 5:46 PM - Reply

    Start looking for another place. I would also contact the bank that is foreclosing to explain the situtation. Once the foreclose, they own the property and you are out of there.

  7. dadcat00759 August 26, 2013 at 5:39 PM - Reply

    Send them a registered letter and ask them what is going on then you will have proof that you contacted them in the event this ends up in court document everything and keep records do not stop paying rent but do not pay it early either.
    Usually when a home is foreclosed on the new owner will keep the previous tenants provided they are a good tenant.
    And actually if you like the house/property this might be a chance for you to buy it very cheaply maybe even by just assuming the payments if the owner now is in that deep maybe they would make a deal with you and you could buy it from them.
    This could be to your advantage.

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