Renters Have New Rights in Foreclosure
74"What you don't know may be hazardous to your financial health"
May 20, 2009 is a date to remember for millions of American home renters faced with eviction through no fault of their own. PROTECTING TENANTS at FORECLOSURE ACT of 2009 (S. 896) was signed into law by President Obama, effective immediately and not expiring until December 31, 2012.
http://www.consumer-action.org/alerts/articles/new_renters_rights_in_foreclosure/
It brought a sigh of relief to this renter - and not a moment too soon. Three years ago I signed a four year lease and moved 26,000 pounds of furnishings into a lovely two story home. It is where I live and where I work. I have never missed, nor been late, on a single rental payment.
BUT, unbeknownst to me, my dear landlords stopped paying the mortgage on the home I rent from them some time ago. (Ten months ago to my best calculation.) They were using my monthly rental payments for their own personal expenses.
Most of you by now have heard of at least one person/family in the same situation. Notices are filed. Security deposits are lost. A costly and inconvenient move looms dark on the horizon. Marriages fall apart. Jobs are lost. Bankruptcies are filed. Kids are scared. Pets are abandoned. Medical expenses soar.
These are good people, not deadbeats. They work hard and pay their bills.
More notices hammered into the front door. In six different languages. Legal notices appear in the newspaper. Neighbors panic. Neighborhood values plummet. The landlord, too embarrassed to tell the truth, often blames the renter. The renter is then blamed and shunned. Kids get depressed. The goldfish gets depressed. The lawn dies. Everyone gets depressed.
The long road to finding answers/solutions begins. Hours on the phone lost in a maze of telephone trees. No real person to be found at any of two dozen different phone numbers. Press 1. Press 1 again. Press 2. Press 2 again. Back to 1.
On the Internet for hours searching for any hint of answers to a long list of questions:
1. What are my rights as a renter?
2. Do I even have any rights as a renter once the house I occupy has been foreclosed upon?
3. What happens to my security deposit?
4. How much notice will I get before I have to vacate the home I rent?
5. Will the Sheriff put my belongings out on the curb?
6. Will being served an Unlawful Detainer (Eviction Notice) hurt my credit rating?
7. Who will actually own the home I rent after the foreclosure?
8. Do I have to pay rent to anyone during this transition?
9. I can't afford to take off from work at this time; how can I move?
10. Does the California Moratorium on foreclosures include rentals?
In short, PROTECTING TENANTS at FORECLOSURE ACT of 2009 (S. 896) provides more protection to renters than any lender wants you to know. www.consumer-action.org
If you have no current lease, or are on month-to-month tenancy, you are entitled by law to receive 90-days written notice after the home your rent is foreclosed upon. Sometimes it takes 7-10 days after the foreclosure to receive a 90-day notice, sometimes it can take 30-180 days to receive a 90-day notice. YOU ARE STILL OBLIGATED FOR THE RENT during this time.
If you have a current lease, you are entitled by law to remain in your home until the lease expires. YOU ARE STILL OBLIGATED FOR THE RENT during this time.
In both cases, it may take some time for you to be informed as to where/whom you pay your rental amount. DO NOT pay the rent to the first person who comes knocking at your door. Once you are notified, check with your County Recorder to verify.
My landlords are not bad people. They are good people who made some bad decisions about the same time the financial markets fell apart. They owe $1,150,000 on a home worth about $600,000. There is no way for them to bridge that gap.
They should however, have told me of their intentions to give my home back to the bank.
More to follow.
Thank You for the Wonderful HubPages Community Love and Support!!
Earth Angel is back and flying fearlessly!! (More like kicking!!) To those of you who have emailed and asked of my whereabouts - the above answers it all!! The home I rent is being foreclosed upon this next Wednesday, July 15th!! It will be auctioned off on the Courthouse steps!! I have not had an extra moment for months!! It took me so long to track down the laws governing renters in foreclosure homes!! A new law, just passed May 20, allows me to breathe a sigh of relief!! (For the moment, anyway!!) I am soooooooooooooo happy to be back with all of you in the Awesome HubPages Community!!
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Comments
Dearest William,
Thank you so much for the kind comments and welcome back!! It's good to be back!!
I've never been one for much government intervention!! I have always believed in a free and open marketplace!! That all people are basically good and will do the right thing once they think it through!!
The problem is when no one thinks it through!! Or, worse, only thinks it through for how it affects them!!
I am a big Obama fan!! He seems to think things through and consider all sides as best he can!!
With the banks, I really believed that once the toxic lending practices were exposed, the lenders would clean up their acts!! Instead, they have one hand out to the government AND the other taking even more advantage of a critical situation! They just don't seem to know how to operate any differently!!??
How much greed is enough?? If people at all levels cannot be self-regulating, then the government must step in!! I was/am hoping that people would/will begin to see the financial-only bottom line is too short-sighted!!
In my case, this isn't just a matter of inconvenience!! I'm over $60,000 in the hole already from something I had nothing to do with nor did I create!!
I know lots of people who have lost much more than that in this market!! But I chose the "safe" route!! I didn't believe in the real estate bubble and thought it would have collapsed two years earlier!! I didn't invest in the stock market; I invested in myself and my publishing company!! I rented instead!!
So imagine my surprise when the lender who holds both the first and second trust deeds on this home hired a Sheriff to tell me I needed to leave immediately!!
The lender and the Sheriff BOTH knew full well of my rights as a tenant!! What they were counting on was that I didn't know!!
That's why I published this Hub so quickly and without all the frills!! I know there is someone else out there right this minute packing boxes as quickly as possible because they don't know they have rights either!!
I live in a lovely gated community of million dollar homes!! Two other families on my street left within 48 hours in a panic when the Sheriff told them to leave!! One man had a heart condition and it nearly killed him!! It just didn't seem right to me according to what I know of California real estate law!! Yet none of us thought to question the Sheriff!!??
Two attorneys told me the same; move as quickly as possible!! I was packing boxes like crazy!! The third attorney was more up to date on tenant law and gave me the Internet links to check it out!!
I stopped packing boxes!! I posted a copy of the law on my front door!! I went back to conducting my business!! AND spreading the word so others don't have to suffer through the same misinformation!!
Thank you again, William, for dropping by!! I have much to catch up on here at HubPages!! I LOVE all the upgrades!
Blessings to you always, Earth Angel!!
It's good of you, Earth Angel, to help get the word out to those who remain uninformed. I, too, believe that people are innately good. However, I am also aware that many people cast a blind eye toward those in need while rationalizing their own selfish views. For that reason, we must remain vigilant.
That's great info for people in a similar situaiton.
Wonderful work, Earth Angel.
I've drawn similar conclusions about the future of housing prices.
I don't think we've seen the lowest prices yet - not by a long shot.
Thank you William!!
Yes, I agree!! We must remain vigilant!! We must continue to heighten our awareness!! And ask questions!! Lots of questions!!
Personal responsibility is more important now than ever!! A rigorous self-inventory, while challenging at times, is worth more gold than Fort Knox!!
Thank you William!! It is good to dialog with you again!!
Blessings always, Earth Angel!!
Thank you Eric!!
Before becoming a Spiritual Activist I was a real estate broker with my own firm and three locations selling over $350,000,000 in commercial real estate throughout the Western United States!!
I agree with you!! Especially with California (the 7th largest economy in the world) NOT being able to balance its budget!! Again!!
In 1993 California was not able to balance its budget and it took years to recover!!
What distresses me is the way we have taken so many others down with us!! Not just the US but around the world!! Yet, I hear very little in the way of responsibility!!
Clinton said something to the affect: "We (the US) may be responsible for plunging the world into this economic disaster but we will be the ones who also come up with the solutions to pull everyone out!!"
Somehow that argument did not rationalize any less responsibility in my mind!!
From a real estate perspective, the prices in the US (and California more specifically) have not made any sense for years!! Now that there are so many homes in foreclosure, the foreclosed prices "make the market!!"
In my neighborhood, the prices hit a high of $1,450,000!! 3B/2.5B pleasant house!! 2 car garage, zero back yard!! Certainly NOT a mansion by an stretch of the imagination! Two houses in foreclosure sold for around $600,000 each!! Buyers are not going to pay $800,000 or up when the market/expectation is now set much lower!!
AND there is soooooooooooooooooo much inventory!! Three hundred times the number of houses for sale than potential buyers!! It does not take a rocket scientist to realize it will take years for this all to even out!!
Most of the investors I know have been buying land!! Even that is tricky for the uninitiated!!
The Wall Street Journal had an article a while back that addressed the issue of renting vs. buying!! The conclusion?? Renters will be 30%+ financially better off over the next ten years than buyers in similar circumstances!!
I still believe in the value of real estate!! But just like stocks and bonds, the values go up and down!! The days/years of just being able to buy anything because it will invariably go "up" are long gone!!
Managing one's assets is A LOT OF WORK!! Turning the process over to someone else is just asking for trouble!! Does "Bernie" ring a bell??
When did we all stop being "students" of Life Lessons!!??
When did we stop "thinking" for ourselves??
When did we stop questioning (respectfully) everything and everyone??
The "American Dream" is a wonderful ideal!! But it really needs an updated definition!!
If the American Dream means owning your own home (which in truth is owned by the lender having been mortgaged to the rafters) and working a zillion hours to pay for it (so there is no time for reflection) causing detachment from loved ones - I think I'll pass!!
I was a little girl in SF during the Summer of Love so I missed a lot of it!! I am however ready for another wave of reevaluation of what's important in life!! Bricks and mortar doesn't rank very high on my priority list!!
Thank you again for your comments Eric!! I agree with you!! "We haven't seen the bottom yet!!" (Only a temporary plateau!!)
Blessings always, Earth Angel!!
Thanks for taking the time to share that info, and make such an honest assessment.
Here in Australia the government is keeping the real estate market from finding its true level by pumping money into subsidies for first home buyers.
Around 30% of property sales are made to younger people who just don't understand that the days of ever increasing property prices are over.
They are committing themselves to huge loans that they can barely meet now with two incomes, without realising the effect that future plans for children, upcoming job cuts and interest rate rises will have on them.
Or perhaps I'm being too negative. We'll see.
cheers, Eric G.
Greetings Eric!!
Thanks for the comments and insights from Australia!! No, you are not being negative!! With age and experience, hopefully comes wisdom!!
I too, did the same thing when I was younger!! Bought my first home when I was 18 years old!! I was just fortunate that I was a bit more conservative than most and hit the market just right!!
Here in the US too, the prices are being artificially stabilized!! Even though prices are down about 40-50%!! The government is offering a host of tax benefits, an $8,000 tax credit for new buyers, and even more complicated (more toxic) sub-prime mortgages!!
It saddens me that we haven't learned our lesson yet!!?? I just hope other countries around the world notice that we haven't changed much and refuse to invest until we clean up our acts!!
Don't get me wrong, I am quite optimistic about the future!! I am a huge Obama fan and think he is doing an amazing job under a mountain of pressure!! It just seems to me that the US economy, like our auto industry, is soooooooooooooo resistant to change that it takes total collapse to get any substantive attention!!
On a more positive note, how do you like living in Australia?? It's been my long-term dream to snorkel the Great Barrier Reef!!?? (It breaks my heart the reef coral are dying at such a rapid rate!! Again, are we going to wake up in time??) (How quickly I moved from positive to negative!!) Tell me you adn your family snorkel it all the time and that's it wonderful!!
Thanks again for your insightful comments about real estate!!
I will keep all posted as to how the foreclosure process goes this Wednesday!!
Blessings always, Earth Angel!!
thanks for share. Great topic.
Thank you again Prasetio30!!
It's been a wild ride!! But it is always good for us to remember that these are just "circumstances" unpleasant as they may be - they are not our lives!!
Blessings always, Earth Angel!!
Wonderful hub Earth Angel - explains the travails of a lease holder of a property being foreclosed so graphically. I am happy for you that this new law has been passed.
I don't want to be too nosey or offer unwanted suggestions, but I do wonder what is the sort of rent you are paying viz-a-viz the present value of the property and the monthly mortgage payment for a new owner. Do you think some lease holders might find it to their advantage - especially with the tax breaks and the incentive having been thrown in - to bid for the house they occupy?
Is that allowed under the new law?
Blessings to you Jaspal!!
Thank you for the thoughtful questions!!
The California real estate market is a bit more manic than many other parts of the country, or world for that matter!!
The lovely house I live in, at the top of the market, reached a high appraisal value of $1,450,000!! At that time I paid $3,000 per month in rent!! The owners, however, were paying $6,000 per month in mortgage and taxes!!
I questioned the owners about the huge negative cash flow prior to my leasing their!! They felt that the $36,000+ loss per year would easily be made up in appreciation!! Which at the time was skyrocketing!!
And they were right, for a while!!
Then the market began to fall - crash really!! Housing prices plummeted!! Rents followed as so many people lost their jobs!! My rent dropped to $2,500, then $2,000, then $1,500!!
Unbeknownst to me, the owners/landlords had refinanced everything they owned, houses, businesses, cars, etc. to the max and were drowning in debt!! They lost everything, one by one, in foreclosure!!
On the Courthouse steps, the opening bid required for my place was only $637,000!! Less than half of what it was a year ago!! And there were zero bidders!!
I have considered buying this home many times! Mostly because the time, energy and money involved in moving again is substantial!! But the house has a funny layout, is on a busy street, has zero yard, sits within a few feet of five other homes and is settling a bit too much for my comfort!!
I do however, have my eyes on a couple of other homes!! Anyone interested in buying should seriously consider the benefits of this depressed market!! Plus, as you said, the wonderful tax credit!!
Having said that, there was a great article in the Wall Street Journal about two months ago that looked into the "owning vs. renting" option!! Their findings are contradictory to my belief!! They projected that over the next 10 years, those who rented instead of owned would be 30% wealthier!!
With my background in real estate, people always thought it nuts that I leased!! But the best way to get to know a property is to lease it!!
Yes, I agree with you!! People who LOVE the properties they rent/lease, properties that have been lost by their landlords in foreclosure, should look into the possibility of purchashing them!!
It's not an easy process, only because the lenders are not set up to work with lessesses/renters, but could well be worth the effort!! But I would caution not to skip any of the steps as in a regular home purchase; all the due diligence, inspections, etc.!!
Thanks again for dropping by Jaspal!! I appreciate your interest!! Do you know of anyone in this situation??
Blessings always, Earth Angel!!
Thank you Earth Angel, for such an exhaustive reply. "Owning vs Renting" is indeed a difficult choice, and so many factors go into it, not the least of them being luck. It was just a thought that had come to my mind and hence the query. You have worked in this field and are knowledgeable and wise on these matters. I wish you good luck and perfect timing in whatever decisions and actions you take.
About knowing anyone in a similar situation. Not quite. But, I am reminded of two good friends, both my course mates and veterans from the Indian Army, who emigrated to the US. They were in leased apartments in LA and had been contemplating buying their own homes. It was not because of foreclosures, but because of falling prices and the need for better accommodation. They were able to find what they and their families liked, and at affordable prices, so they sort of 'took the leap.'
From all the information that they shared, they both seem to have moved to better accommodation and locations - one has relocated to San Francisco - that suit their lifestyles and also seem to make financial sense. How it all turns out in the future will probably depend on the price movements in the long term, and that only time will tell...
very nice hub thnaks
William F. Torpey says:
6 months ago
I'm delighted to see you back here at HubPages, Earth Angel, and I'm glad your rental fiasco has eased. You've been missed. Your experience would have been much different if Obama had not been elected. Thank you, America.