RENT IT RIGHT
Question: I’m a renter and have just learned that my home is being foreclosed. My landlord thinks the bank will evict me, because my lease began after he used the property as collateral for his mortgage (which he’s defaulted on). Is there any way I can stay?
Answer: As your landlord explained, when a lease is younger than the loan that’s secured by the property, and the borrower defaults, the lease is wiped out, under the normal rules of the game. Of course, the bank that now owns the property can choose to become a landlord and let tenants stay, but most banks do not want anything to do with property management. They also believe that empty properties are easier to sell, despite the overwhelming evidence that a neighborhood full of empty (and possibly vandalized) foreclosed homes means that those homes will drop in value, thus making any sale less profitable.
There may, however, be a way for you to stay, depending on who owns the landlord’s mortgage. Fannie Mae, the large buyer of home mortgages and loans, announced last month that it would allow rent-paying tenants to remain in foreclosed properties as month-to-month tenants. It remains to be seen how these bankers and number crunchers will fare as property managers.
-- Janet Portman, Inman News
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