Landlords Facing Foreclosure
It’s been happening more frequently, where tenants are being evicted due to the landlord facing mortgage foreclosure. Unfortunately, many tenants do not know there is anything wrong until a sheriff comes to the property to serve the foreclosure notice. The tenant has already paid the montly rent and somehow the landlord let the mortgage fall behind. In today’s market, it looks like the tenant ends up in a bind due to the landlord’s failure to keep up with the mortgage payments.
In these situations, the mortgage company will often offer the renter “cash for keys” to pay the tenant to move out timely and leave the property clean. The amount paid can range from as little as $500 to as much as $2,000. It won’t make things “right” but it can help with unexpected moving expenses.
How can a tenant avoid this situation?
- Ask your potential landlord for the most recent mortgage statment to see if they are up to date on their payments.
- Ask the landlord for permission to write the monthly rent check to the mortgage company but you can let the landlord send it.
- If you have good credit and a stable income, check out to see if you can afford buying a home or even consider talking with your landlord to see if he would consider selling the house to you. If the home has already missed mortgage payments, the property could be sold as a short sale and the bank may accept less than the full loan amount owed by the landlord.
- There are additional tax benefits available currently for those looking to purchase between now and May 2009. Tax benefits are $7,500.
If you are a landlord, what can you do if you fall behind on mortgage payments?
- Get in touch with the lender and see if the lender will modify the loan. A modification can adjust your rate or adjust other terms of the loan.
- If you are unable to get a loan modification, consider selling the property. Other investors may be interested in buying the property and keeping the existing tenants.
- If more is owed on the property than it is worth, consider selling the home as a short sale.
- Lastly..be honest with your tenants! If you’re in trouble, tell them the situation so they can properly prepare.
