Housing Authority and Foreclosure

[LandOnMyFeet]

I have a rental in pre-foreclosure. I'm trying to work out a loan modification. Even if it forecloses it may be two years before the sheriff sale. I have a potential tenant with a housing authority who applied to lease the property but the housing authority is refusing to contract with me because of the status of the property. Is this legal, are there discrimination issues going on here? Can I take any legal action?

[justbroke]

I don't read how this is discrimination. The housing authority (HA) is protecting themselves and their client. Additionally, most mortgages on investment or rental property have an assignment of rents clause. I would not want to personally get involved with that.

As for my background, I have owned multi-tenant and single family rental residences. I understand the issue. You may want to rent to someone else not using a housing choice voucher through an HA since the HAs are pretty strict. It comes down to why they'd enter a contract with an owner already in foreclosure. That just adds too much worry and contention.

[bcohen]

Discrimination??? Why would any sane person agree to rent a home which is in foreclosure, or soon will be? I remember at the peak of the housing crisis, experts recommended that anyone considering renting from a private owner should look up the property ownership records online to make sure the property is owned by the person claiming to be the owner, and not in foreclosure. Wouldn't you expect a housing assistance agency to do at least as much diligence up front?

[LandOnMyFeet]

We have a housing tenant in a property that is in the pre-foreclosure/foreclosure process. The housing authority is holding payment, (Just started this month) until the foreclosure court date passes. We let them know we are working on a loan modification while going through the foreclosure process. I looked at the contract which notes if the property is foreclosed, past tense, they no longer have to pay me and pay the bank. But the contract does not say they can hold money until each court date passes. We appeared for the Motion to Foreclose and received another 28 days until we file our Affirmative Foreclosure Defense. Can the housing authority hold payments until each court date passes? We are considering if they don't pay to give tenant a five (5) day notice and get someone else in there ASAP while we continue to work on our loan modification.

We don't have the cash to take legal action against the authority but I can't see how they can decide to stop paying even when the property has not foreclosed.

Any suggestions

[justbroke]

The problem is just as I wrote above, and that is if the lender has an "Assignment of Rents" clause in the mortgage. I guess you could write a
formal letter to the housing authority that there is no Assignment of Rents clause (and offer them a copy of the mortgage), and that withholding of the rent is illegal and that you would start foreclosure proceedings. Maybe you could get an attorney to take it pro-bono or on contingency???