Renting a house in foreclosure

[Hope2File]

This isn't exactly on topic, but I thought I might find some answers here. We've been renting a home for almost 3 years. Our lease was up in March, so we knew the landlord was going to put the property on the market. We were shocked when it was listed as a short sale. We talked to the landlord and negotiated a 25% rent reduction due to the hassle of showings. The last time I talked to the LL he said he was still making mortgage payments and trying to stay out of foreclosure. Well, the notice was posted on our door last night. The sheriff sale is in about 3 weeks. The redemption period is 12 months.

So we're annoyed that the LL lied, although we kind of knew because of the short sale. There have only been a couple showings and there doesn't seem to be any interest. We'd like to stay as long as possible, but now we're thinking we should maybe try to get the rent even lower....and have been given some advice to just stop paying and hold onto the $$ in case the LL decides to come after us for it.

We definitely don't want to jeopardize our credit since we are rebuilding. We'll hopefully be able to get an FHA loan next spring, so we'd like to stay where we are until then. Has anyone else been in a similar situation?

[chp13]

I'm currently in the same situation. My LL told me he would not short sale the house and we had nothing to worry about when I signed a 1 year lease. He told me I could rent it for 2-3 years if I need to. I specifically told him I didn't want to sign a lease if he was going to SS the house. He fully understood my concern, but he eventually put it on the market 7months into my contract. I told him that due to his verbal promise I would be moving out ASAP because I didn't want to deal with waiting until it sold then finding a place. He later confessed that he had decided to SS shortly after I moved in, BUT he did not tell me until now!

My advise would be MOVE OUT ASAP! Dont wait, avoid the pressure of finding a new place in a short period of time.

[helpmeout]

Well, if I were you, I would stop paying the rent and put it towards the security deposit of another apartment. Write your landlord and tell him what you are doing and why. I doubt you will get your security deposit back any other way.

[daxtell]

i work for a realtor who manages foreclosed homes for the banks who take them back from the former owners in a foreclosure. you are obligated by law to pay the landlord up until the date of sale of the property (date on the sherriffs notice). after that you wait until you hear from the bank if you still have an active lease because tenants have rights! they may offer you several options including honoring your lease, cash for keys or a 90 day move out option.

[AngelinaCatHub]

i work for a realtor who manages foreclosed homes for the banks who take them back from the former owners in a foreclosure. you are obligated by law to pay the landlord up until the date of sale of the property (date on the sherriffs notice). after that you wait until you hear from the bank if you still have an active lease because tenants have rights! they may offer you several options including honoring your lease, cash for keys or a 90 day move out option.

This is my understanding as well. I think our OP should take full advantage of the law that protects him by lease. The cash for keys is a possibility rather than just leaving. 'Hub

[newbie2]

Don't jeopardize your FHA mortgage that you want by not paying your rent on time. Part of the mortgage process for approval is showing timely rental payments. If your landlord won't (or can't) give you a letter stating your rent payments are on time, then your own records will be needed (cancelled checks, money orders, etc) An underwriter for your mortgage will definitely be looking at this as one aspect to obtaining approval. The "he wasn't honest with me" won't fly with a mortgage underwriter for failure to make timely payments.

[AngelinaCatHub]

Don't jeopardize your FHA mortgage that you want by not paying your rent on time. Part of the mortgage process for approval is showing timely rental payments. If your landlord won't (or can't) give you a letter stating your rent payments are on time, then your own records will be needed (cancelled checks, money orders, etc) An underwriter for your mortgage will definitely be looking at this as one aspect to obtaining approval. The "he wasn't honest with me" won't fly with a mortgage underwriter for failure to make timely payments.

An excellent point. Two wrongs do not make YOU right. It is on the head of a liar, so don't bring yourself down to his level. About the security deposit, once you do make up a date to move out, you might negotiate the last month's rent in lieu of that deposit, but get a paid receipt stating that fact. Also stay civil with the LL as you don't know what HE is going through. Maybe bk as we are and have? Very stressful and makes people "crazy" at times. He's probably a good guy going through a bad time. 'Hub

[helpme2010]

If the owner of the new property is Fannie Mae, you have the ability to rent for one year through Fannie Mae, before they evict you. Find out who the owner of the house is and you may have legal rights to stay for a period of time as a renter.

[tobee43]

i would do as some of the PP'ers have suggested and stay and not pay. you may be one of the lucky one's that the bank will actually PAY you to leave! so i would also stay and pay, since after all, you know the place is in foreclosure so the LL is not giving YOUR money to the bank at this point.

best of luck to you!

[SPalin]

I'm in a simular situation, moved into this rental home just before my old home was sold Sheriff's sale. Now my currently LL has filed Chapter 13 (and has started making payments to the Trustee for the second), the first is held with BofA has only filed a NOD back in November 2010. I'm now only paying $500 plus utilities and gardner, but beats the $1,400 I was paying before they filed for Chp 13! I'm planning on sitting and waiting for C4Ks, once BofA gets the house back, under California law, I have 90 days before they can start an eviction when it involves a foreclosure. I have been checking Recon for a sale date, but nothing is showing through July sales dates with the County. I would check and see if your State has a similar renters right law, and sit it out and save some money in the process!

[Sweetpea3829]

From the other end of the spectrum...

We have a multifamily home in default. Discharged in a BK 7. We paid and stayed up until the lender refused to modify because we'd never been late.

We had witheld most of the information concerning our default from our tenants. We're still hoping for a modification and why tell our tenants we're in default and have them leave when we may end up having the loan modified?

We have recently informed our tenants that we were seeking a modification...we did so because they started asking questions when we took a job out of state and left. We also informed them that the loan was in default because of the modification (and it is). Our intention all along has been to inform our tenants if the modification went south and we received a notice of foreclosure sale.

Obviously there's more to it than that. Anyways...

I've done a lot of reading on what our tenant's rights are. As a tenant, you will have time after the foreclosure sale date. AT LEAST a month. As a tenant, you also stand to benefit from Cash for Keys.

I would suggest that you continue to pay. Either the landlord...or, contact the landlord's bank and offer to pay them directly. Why? Because technically, the lender has the legal right to that rent anyways. Most likely.

Make sure that you can document that you've paid. And stay for as long as you can...offer the lending bank to leave under Cash for Keys. You stand a good chance of benefiting from your LL's default. :-)