Renters Of Foreclosed Houses Are Facing Risk And Trouble

Posted on December 29, 2008
Filed Under Foreclosure Homes | Leave a Comment

The renters of repossessed houses are facing risk and trouble. The renter may be current in paying rent but the landlord may be defaulting in mortgage payments. This is happening everywhere more and more right across America. The tenants for no fault of theirs are becoming victims of foreclosure. The banks do not think twice about evicting tenants with little warning soon after seizing the property and foreclosing on it.

The tenants do not know where to go. Their rental money as well as security deposit vanishes with the ex-landlord and the new one shrugs off all past agreements. Invariably they end up in shelters for the homeless due to no fault of theirs. With too many such cases on the rise the authorities are at last sitting up.

Fannie Mae under a new stewardship took the decision of changing its policy towards tenants who occupy its foreclosed properties. A new lease is signed with the tenants while the unit is up for sale. In some cases the tenants are given money to shift to alternative quarters. The length of the new leases or the amount of money to be paid for shifting has not been decided upon as yet.

Freddie Mac has announced that it will soon enforce similar regulations.The crux of the problem is that the tenant often does not know that the house is in foreclosure or who is foreclosing on it. Fannie Mae has decided to give advance information to the tenants. A spokesperson of Fannie Mae, Brian Faith said, “Most tenants don’t normally know the details of their landlord’s mortgage arrangements, but we’ll be contacting the tenants in foreclosed properties we own to make them aware of the option to stay in their home through a lease with Fannie Mae.”

Fannie Mae and Freddie Mac have in their portfolios $11.5 trillion worth of house mortgages. It is roughly estimated that 4,000 tenants occupy these units that have been foreclosed. They will qualify for their latest plans.

But the number is just a fraction of what is happening nationally. Tenants in big complexes are relatively safe because as yet multifamily loan defaults are as yet low. But 40% of all the tenants calculating to 15 million reside in single-family houses that are owned by investors who appear and disappear. For these renters life is risky.

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