Renters In Foreclosure

When your landlord falls behind on their mortgage payment, the bank can take back the home. This process is called foreclosure.

If you are renting a home that has fallen into foreclosure, Federal, State and some city laws will at least temporarily keep you in your home.

If you live in the City of Los Angeles, renters in good standing cannot be evicted because of a foreclosure. (See details below.)

If you live anywhere else in California, renters get until the end of their lease, or at least 90 days, to move out in a foreclosure.

CALIFORNIA RENTERS (outside of the City of Los Angeles)

How long can I stay?

According to U.S. law, which went into effect in May 2009:

If you have a written lease with your landlord, you cannot be evicted until the end of your lease.

If you do not have a lease, you must receive at least 90 days notice before you have to leave the property.

What notice will I get?

According to California law, your landlord does not have to tell you the home you are renting is in foreclosure. But before the home is sold, a “Notice of Sale” must be posted at the home along with some information about your right to continue to live in the property.

Once the home is sold, the new owner (bank or third party) must attach a cover sheet to the notice of termination of tenancy providing information about your rights to stay in the property.

Who do I pay rent to?

Until the home is sold, you must continue to pay your monthly rent to your landlord. You owe rent to the new owner once the home is sold.

If the new owner wants you to move out, they must give you a 90-day written notice. If you don’t move out within 90 days, they can begin the eviction process. The new owner cannot cut off your utilities, change the locks or make other efforts to throw you out.

What is “Cash for Keys?”

In most cases, the new owner is the bank or lender that foreclosed on the property. They may offer you money to move out sooner than 90 days. This is called “Cash for Keys.” If you agree to this make sure the person has authority to make the offer and gives you the offer in writing. Not all tenants will receive a cash-for-keys offer.

What about my security deposit?

Your landlord must return your security deposit minus any lawful deductions, or transfer it to the new owner. If not, both the old and new owner is liable.

What if I’m on Section 8?

The new U.S. law giving renters 90 days notice also applies to Section 8 tenants. Other special rules apply if you receive Section 8. Contact your case worker or local Section 8 office immediately. Tell them about the foreclosure and discuss the terms of your contract.

What if my city has rent control?

Some cities with rent control do not allow a new owner to evict you because of a foreclosure. Contact your local rent control office for more information:

Santa Monica: (310) 458-8751

West Hollywood (323) 848-6450

Beverly Hills (310) 285-1031

CITY OF LOS ANGELES RENTERS

Starting in December 2008, a renter in the City of Los Angeles cannot be evicted simply because of a foreclosure.

Los Angeles has rent control, which protects some but not all renters. Rent control laws require landlords to have one of 12 specific reasons to evict a tenant. A foreclosure is not one of those reasons.

This protection against foreclosures now applies to all renters in the City of Los Angeles.

If the bank or lender which takes over a property in a foreclosure tries to evict a renter, call Los Angeles’ rent control hotline at (866) 557-7368 or (213) 808-8888.

If you receive an Unlawful Detainer, immediately contact a lawyer or a legal aid agency.

If you get notice of a foreclosure sale from a financial institution, contact that business to find out how and where to send your rent.

Watch out for scams!

After someone buys the property at a public auction, other people may try to collect rent from you. Don’t give money to anyone unless they can prove they now own the property.

The “Deed Upon Sale” will tell you who the new owner is. You can get a copy by visiting the Los Angeles County Registrar Recorder’s office at: 12400 Imperial Hwy, Norwalk, CA 90650.

Tips for Avoiding Foreclosure

Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?

Don’t ignore the letters from your lender

Contact your lender immediately

Contact a HUD-approved housing counseling agency

Toll FREE (800) 569-4287

TTY (800) 877-8339

If you are unable to make your mortgage payment:

1. Don’t ignore the problem.

The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your lender as soon as you realize that you have a problem.

Lenders do not want your house. They have options to help borrowers through difficult financial times.

3. Open and respond to all mail from your lender.

The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notices of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.

4. Know your mortgage rights.

Find your loan documents and read them so you know what your lender may do if you can’t make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.

5. Understand foreclosure prevention options.

Valuable information about foreclosure prevention (also called loss mitigation) options can be found online.

6. Contact a HUD-approved housing counselor.

The U.S. Department of Housing and Urban Development (HUD) funds free or very low-cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender, if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.

7. Prioritize your spending.

After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses–cable TV, memberships, entertainment–that you can eliminate. Delay payments on credit cards and other “unsecured” debt until you have paid your mortgage.

8. Use your assets.

Do you have assets–a second car, jewelry, a whole life insurance policy–that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don’t significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

9. Avoid foreclosure prevention companies.

You don’t need to pay fees for foreclosure prevention help–use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month’s mortgage payment) for information and services your lender or a HUD-approved housing counselor will provide free if you contact them.

10. Don’t lose your house to foreclosure recovery scams!

If any firm claims they can stop your foreclosure immediately and if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional or a HUD-approved housing counselor.

 

Underwater Home loan A Vexing Dilemma

mark spectorIf CoreLogic’s data are anything at all use about 11.1 million homes in america (23.1 per cent of all mortgaged properties) were underwater in the October-December quarter. This implies 10.8 million properties, up from 22.5 %, through the July-September quarter. Even though the amount of underwater mortgages had dropped in the last three quarters, it had been mainly due to much more number of home foreclosures. This has place numerous in a quandary, keeping them from offering their properties in an currently poor housing market.

Generally, underwater home mortgages increase when ever home values drop. In December 2010, home values had been the lowest since the housing bust. In a regular market, about 5 per cent of householders could be underwater.

According to one estimate, about 2.4 million individuals have less than 5% equity in their properties, raising the threat perception should prices drop in their region. Nevada noted the worst case scenario, with a harmful property equity. Trailing strongly behind are Arizona, Florida, Michigan and California, with nearly half of property owners having mortgages underwater. Alternatively, Oklahoma had the smallest percentage of underwater mortgages through October-December quarter at 5.8 per cent. 

At present, home sales are dampened largely by underwater home mortgages. Householders who wish to sell their properties refuse to incur a loss, while banking institutions usually do not agree to a short sale. This means a mortgage company permits a borrower to sell the property for less than the specific amount of the mortgage.

Underwater mortgage is among the vexing troubles ailing the united states real estate markets. Regardless of the Home Affordable Modification Program (HAMP) created by the government in 2008, the situation continues to affect the country. Apparently, state attorney generals are making concerted efforts to solve the problems related to improper mortgage foreclosures with big mortgage companies.

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