Want to rent a house. How to make sure it isn't in foreclosure?

[lovemybugs10]

Does anyone have any suggestions to avoid being placed in that situation? Would it be tacky/wrong to ask for a current bank statement to verify it's caught up?

[debee]

You could check the public record for foreclosure activity. What you can't do is forecast their financial condition next month, or the month after, etc.

Multi-family units or apartments might be safer than single-family houses because they would be purchased by investors (as opposed to owner-occupiers).

[despritfreya]

I do not consider it "tacky" to protect yourself.

1. You must find out if there is 1 or 2 or even more mortgages. Checking the County Recorder's office will help if you don't want to ask.

2. Obtain a current billing statement from each lender. If the landlord is on the up and up, he/she should not object to supplying this. The statements will tell you the loan status.

3. Set up an escrow with a title company. Pay your "rent" to the title company. The escrow instructions should be that from your rent the underlying mortgage(s) are paid - assuming your rent is equal to or greater than the debt service. If your rent is equal to the debt service add $1 to it. The title company then pays the mortgage(s) and also sends $1/month to the landlord so the landlord has comfort that the mortgage is being serviced.

Using the title company (you offer to pay the small monthly fee) protects you from a landlord that pockets the rents and fails to pay the mortgage. This only works, however, if your rent covers the mortgage(s).

Des.

[bk2009]

Rent from a small, local landlord. Someone who isn't a national chain but who has 30 so properties.

[lovemybugs10]

Thanks!!

[olivies]

We were burned this way a couple years ago. Moved from CT to FL, signed a lease for Feb1. The landlord stopped paying the mortgage on that house March 1. Her own house was foreclosed on that June, but we didn't know that. We just thought she moved when she provided her new address to us. We found about the hell we were unknowingly in come July when the process server knocked on our door. We paid first, last, one month's security and an extra $1000 security because we have 6 kids. Total: $7900 ($2300 a month rent). I am absolutely certain she was simply robbing us and knew she couldn't hold up the rental contract when she entered it. I think that constitutes fraud, and I wish to G-d that these people doing this to families would be prosecuted. Naturally, when we found out about our situation we asked her to put our security and last in a trustee account but she couldn't because she didn't have it. She then stopped pool and lawn service (which by the HOA's renting rules she was required to pay) leaving it on us to cover those costs, and STILL had the nerve to demand rent. We told her exactly where to go, found a new rental and moved on.

What we did when we were looking for a new rental was we asked for a letter or statement from their lender showing they were in good standing and we asked the homeowner to put it into the lease that we if we get notified that foreclosure proceedings are starting we are entitled to our full security deposit back within 5 days. He had no problem accommodating us on that.

[debee]

we asked the homeowner to put it into the lease that we if we get notified that foreclosure proceedings are starting we are entitled to our full security deposit back within 5 days. He had no problem accommodating us on that.

What a great idea. We have rentals and I would provide a letter (but not a statement) and alter a lease.

I would recommend googling "Protecting Tenants at Foreclosure Act of 2009" as well to see what measures are in place to protect your rights in the event of foreclosure.

[ssmdem]

I think that is a good idea, but what I plan on doing is checking our county records monthly when we begin renting. If I see a lis pendens come up, I know it's time to start looking for something, and I won't be paying the landlord another dime after then. We have a rental property ourselves that we point blank told our tenant what was going on when we could no longer pay the mortgage on that property. Told her to quit paying us rent and she was welcome to stay an additional two months for free to cover the last month's rent and deposit she had paid. Beyond that she was welcome to stay until the bank told us she needed to move. She's looking for somewhere else but knows she is in no rush to find anything.

[chicagoannie]

I was in this situation - I was leasing a home and the owner was out-of-state. Looonnng story short, this guy (who was a subprime mortgage VP at the (then) largest mortgage company in the U.S. remember "...is on your side.") got his salary cut when the subprime market tanked, then lost his job. In the meantime he was collecting my rent payment and using it to pay on his home in TX. A friend in real estate let me know the house I was leasing was in foreclosure. I checked public records and found out he'd also filed BK. Figuring I would not get my security deposit back, I did not pay the last month's rent - used it as deposit on another home. Former landlord SUED me....tied up my time and energy in court... It's not a bad idea to check county records regularly, but lis pendens takes a while to show up on some sites. You are better off getting a stipulation in your lease specifically stating the lease agreement is void should the rental property enter foreclosure and that security deposit will then serve as final month's rent.