| With the historic rate of foreclosures throughout the | | | | The dilemma |
| country, one question has repeatedly come up from | | | | Even though this is the law now, many of these lending |
| renters, as well as the banks that held the mortgage. | | | | institutions are still moving forward with their plans to |
| What happens to renters in a home that is foreclosed | | | | drive the renters out. They are banking on these |
| on? | | | | renters being uninformed and doing as they are told. |
| The general scenario | | | | Attorneys-general of several states have written |
| The day is bright and sunny and the family of four is | | | | warning letters to these institutions about this behavior |
| enjoying an afternoon together. They've paid their rent | | | | and that it will not be tolerated and they are making |
| and they have paid it on time since first moving in | | | | efforts to inform the general public. Nonetheless, the |
| years ago. This family is completely unaware that the | | | | practice continues. |
| landlord has defaulted on the property and that the | | | | Even for renters who know and understand their |
| servicer has foreclosed on the property. | | | | rights, it can be a challenge to stay in their home. With |
| This family arrives home one afternoon to find a letter | | | | bank failure after bank failure, deeds and notes pass |
| addressed to 'tenants.' They are to vacate the | | | | from one financial institution to another like baseball |
| premises within 72 hours. They stumble into a panic, | | | | cards in young boys' hands. A renter could deal with |
| calling the bank, calling their landlord, calling a realtor and | | | | one bank, showing them the lease, and dealing with |
| not getting through to anyone. They scramble to find a | | | | endless phone calls and letters, finally reaching the point |
| new place, tap into savings for the deposit and first | | | | when they are left alone to live out the term of their |
| and last month's rent -something they hadn't counted | | | | lease, only to have that bank taken over by another |
| on- and wind up wiping out that savings. | | | | and having to start the process all over from the |
| The truth | | | | beginning. |
| This scenario has occurred countless times across the | | | | What can the industry do? |
| country and renters are simply not aware that the | | | | Mortgage underwriters and banks don't want to sit on |
| laws had been changed to protect them. This family's | | | | foreclosed homes; they want to sell them, but when a |
| situation is typical for many renters whose landlords | | | | long lease term still must be honored, it can make |
| simply kept the money they paid for rent and turned | | | | selling that home more challenging. Even so, the law |
| around and avoided paying their mortgage. While the | | | | has been written and put into effect and these |
| renters may have a case against their landlord for | | | | institutions must abide by the law of the land. |
| fraud, they have a stronger case against the bank, or | | | | The best thing for members of the housing industry |
| servicer, to stay in their home. | | | | can do -whether they are mortgage brokers, real |
| A renter cannot be evicted during the term of their | | | | estate agents, or bank managers- is to inform renters |
| lease by a lender. The lending institution must honor the | | | | of their rights from the beginning. Being honest is one |
| terms of the lease. That means if a renter has signed | | | | of the best remedies to a difficult situation. |
| a two-year lease and the bank forecloses at the end | | | | If renters living in a home or a condo or an apartment |
| of the third month, that family has every right to remain | | | | pay on time, they may also show that they are |
| in that home, paying their rent to the bank now -not the | | | | responsible when, and if, it comes time for them to |
| former landlord- until that two year lease expires. | | | | apply for a mortgage. |