Unwary Renters Caught In The Foreclosure Net

April 28th, 2008 | Tags: Foreclosure

Many unwary renters are being caught in the foreclosure net in Detroit cities and elsewhere in the country. The sub-prime fiasco has led many to postpone plans for buying houses. On the other hand thousands evicted from foreclosed houses are seeking rental accommodation. Both combined have led to a rise in demand for rented units.

The lease agreement does give the tenants some amount of protection but these become invalid if the mortgages neither are nor paid and taxes fall due. For instance in Michigan if the house loan predates the rental agreement then the rights becomes void. The foreclosing party is not bound to agree any rental lease. In most cases they are not willing to do so.

Metro Detroit has been the centre of the national foreclosure tornado. In 2007 there were 61,031 foreclosure postings in Wayne, Oakland, Livingston and Macomb counties. It includes both owner as well as tenant occupied properties. The number is an increase of 75% over the previous year. Thus the credit crunch is sweeping out tenants from bungalows to multi unit condos. Exact data about matters relating to tenants is difficult to obtain.

The story of Charlene McKnight is one of the many. A retired municipal worker with three children she rented a house in eastern Detroit paying $700 per month. She was always correct and current in her payments. One fine day she returned from her shopping to find a foreclosure notice pasted on her front door. Upon enquiry she found that her neighbours too had been surprised with similar notices. The landlord was being sued for falling back on mortgage payments for about a dozen units. McKnight took legal advice and stopped paying rent. Finally she managed to shift to another leased unit nearby.

Foreclosure figures are rolling in but they do not highlight the plight of the thousands of renters in Michigan and especially Detroit. Most of the single family units and apartment complexes are shown as commercial properties – confusing and confounding calculations. .

ACORN or Association of Community Organizations for Reform Now have been receiving increased calls from tenants who are suddenly finding themselves in the foreclosure soup for no fault of theirs. The advocates are advising tenants to check on the bonafides of the landlords before agreeing to move in. The tax records and court records about foreclosure should be scrutinized. Even then a wily landlord can have the last laugh.