Foreclosures Affecting Tenants

June 24th, 2008 | Tags: Foreclosure Victims

Inland counties are one of the worst hit foreclosure zones. The irony is that not only borrowers but foreclosures are also badly affecting tenants who had nothing to do with the mortgage contract. They are being evicted by droves with little or no warning. Most are just bystanders suddenly sucked in by the whirling tornado. Reliable sources like the California Apartment Association estimate that on an average about a fourth of the single-family houses had been occupied by tenants.

Agents who market foreclosed houses say that the tenants are shocked that despite regular payment of rent they have to suddenly march out. There is no guarantee that they will be refunded their security money. If the house had been leased through a property management firm, then their chances of getting the money back would be better. But even that is not assured because some management firms deposit the amount with the landlords who will avoid the issue.

Darrell Moore of Inland Counties Legal Services says that most of the landlords keep the tenants in the dark about the mortgage matter. They continue to collect the monthly rent and also bring in new renters – biding time till the final foreclosure hammer falls. Moore sees each week an increasing number of renters coming to court in a state of shock and tears, trying to legally ward off eviction. The law is generally on the side of the lenders who have given the renters 30 days marching orders.

The tenants will be lucky to avail if an offer comes from the lender known as ‘cash for keys.’ Depending on the wishes of the lender the renter may get anything from $500 to $2,000 in return for vacating the premises without hassle and leaving behind the house in good condition.

Legal experts caution tenants about continuing to stay despite eviction orders because this might tarnish their credit records. With a bad credit score it will be difficult to find another rented accommodation.

Real estate agent from Moreno Valley reports that renters occupy 50% to 60% of the foreclosed houses he tries to sell – most of whom heard about the foreclosure situation at the umpteenth hour. Shifting in a hurry poses challenges as the majority live from one pay cheque day to another. The matter of security deposit becomes a stiff hurdle.

Plans are afoot to get legal protection for the tenants facing eviction from foreclosures. It is unlawful of the owners to collect rent without paying mortgage dues.