Most of the occupants are homeowners, who must scramble to find housing with little notice. They're being joined by scores of renters who discover, often with no warning, that their rented house or apartment is now owned by a bank, which wants them out.
Federal legislation signed in May 2009 gives important rights to tenants whose landlords have lost their properties through foreclosure
OwnersTypically, foreclosed home were owner-occupied, but often it's owned by investors and speculators who were hoping to profit from the rents and rising equity. They got caught between falling housing values and rising mortgage interest rates. Many speculators were not cash heavy and couldnt sell or cover their monthly costs. In short, they lost their investments
The Bank as Property ManagerIf the bank becomes the owner, it may pay a property management company to handle the property. But don't expect service. These properties are an albatross and wont get much attention.
Many tenants have no idea that their building has been taken at foreclosure. They continue to pay rent to the former owner, who often pockets the money but isnt inclined to maintain the building they no longer own. Because the banks are stuck with so many foreclosed properties that they can't sell, they were not committed to maintaining the property making life impossible for their tenants until those tenants are evicted.
How it WasBefore May 20, 2009, most renters lost their leases upon foreclosure. The rule in most states was that if the mortgage was recorded before the lease was signed, a foreclosure wiped out the lease (this rule is known as "first in time, first in right
May 20 2009The rules changed dramatically on May 20, 2009, when President Obama signed the Protecting Tenants at Foreclosure Act of 2009. This legislation allowed the lease to survive a foreclosure. That means the tenant could stay at least until the end of the lease, and that month-to-month tenants would be entitled to 90 days' notice before having to move out
Not perfect, but at least we are beginning to pay attention to the hidden victims in this mess, the tenants that pay rent on time and do no wrong.
Thanks for Reading
REO: Still an Opportunity
Extend The Home Buyers Tax Credit
The Fed and The Housing Recovery
Banks and the Housing Recovery