Foreclosures and the Impact on Renters
Much attention is placed on homeowners facing foreclosure. Yes, this attention is well deserved, but it appears as if many media and news organizations have forgotten about the impact foreclosure has on renters. If you are a renter living in a property that is facing or is in the middle of foreclosure proceedings, you may not know what to do or where to turn. For you, it may seem like you are at the end of your rope.
When facing foreclosure, many renters will simply just cut their losses and relocate. This may mean having to move without recouping a security deposit. Unfortunately, there are some renters, possibly you, who cannot up and afford to relocate, especially without getting your security deposit back. When renting a new apartment, most landlords require a security deposit and if you weren't prepared to move, you may not have the money.
There is another serious issue that renters forced to relocated are facing. Foreclosures are on the rise. What does this mean? It means that an unprecedented number of homeowners have no place to live. This often turns them into renters. Unfortunately, this lessens the availability and rental choices for renters, like yourself. It may mean that you have to pay more in rent or move to another city or town.
As previously stated, many renters decide to throw in the towel and relocate. If you are unable to do so, you may want to wait and see what happens. Of course, during this time you should take steps to protect yourself. Save enough money to cover your moving expenses, including a new security deposit. You will be prepared in the event that you are legally evicted from the property. You should, however, know that eviction from a property in foreclosure is not something happens overnight. You usually have a few days or even a few weeks to make alternative living arrangements.
Before making a decision, all renters are urged to look at the property in question. Are you renting a unit from an apartment complex or a multi-family home? If you are, you may be able to stay. Investors at foreclosure auctions often purchase rental units. These investors want to see a return on their profit. The way to do this is to make sure their rental units are filled with quality, on time paying tenants. With that said, if you are renting a single-family home, you may want to prepare to relocate. Unlike with rental properties, single-family homes are often purchased in foreclosure auctions by those looking to live inside.
Despite the fact that some new rental property owners may be willing to work with you and let you continue to rent, there is no guarantee that the property will sell. When low bids are received at a foreclosure auction, the original lender often steps up to the plate and buys the home. In this case, the home is no longer considered a foreclosure, but a REO (real estate owned) property. Unfortunately, this doesn't always workout well for renters. With REO properties, lenders, who are also known as investors, may start the eviction process right away. Many cannot or do not want to become property managers, even just for a month or two.
As previously stated, foreclosures can occasionally come as a surprise to renters. Your landlord will receive multiple warnings and notices, but they are not required by law to share them with you. Renters usually become aware of foreclosure proceedings when notices are placed on the building. At this point in time, you should contact the lender in question. See what your options are. Can you buy the property yourself? If you can prove that you have a stable income, the lender in question may be willing to work with you.
As a recap, foreclosures are having a significant and usually negative impact on renters. If you are a renter who lives in a property that is facing foreclosure or if you fear foreclosure is looming, you may want to start making preparations to ensure that you are well prepared for what is to come.
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