Renters Arent Immune to Foreclosure
As the credit crisis continues to unfold, it has hit all new levels. Renters are being forced to move out of their homes due to the owner's inability to refinance. Over the past 5 to 7 years, investors have purchased homes using creative financing such as short term interest only and Option Adjustable rate. Now, that these loans are becoming harder to find or are no longer available at all. Home owners are forced to show all income and many aren't in a position to show all their income or in some cases, they can't even show assets. This is an unfortunate problem for people who live in these rental properties.
Even though renters have paid their monthly payments on time, many are faced with the experience of facing foreclosure themselves and they aren't even the home owner. Banks aren't willing to keep tenants in a house that in the process of repossession, so the banks force the tenants out. Banks will send notices to tenants to notify them that they have as little as 14 days to vacate the premises. In some cases, banks aren't even aware that the property was rented out and the sheriff's department come to serve the eviction notices to homes that have unaware tenants.
In a personal study, I investigated and compiled data from 2 local Title & Escrow companies and crossed referenced on 5,000 units in the greater southern California region that are currently in foreclosures using listings on Realtytrac.com and Zillow.com of these homes, 27% of all non-owner occupied are in Notice of Default or in the process of foreclose. It was impossible for me to make an accurate study on a national level using the same techniques, but during a recent study reported by CBS news announced that across the nation that 38% of all foreclosed homes involve rental properties. This means that more than likely renters currently reside in these homes and face eviction.
This alarming number indicates that we are headed in the wrong direction. As these loans continue to reset and become due and payable, we will see more foreclosures and more evictions now and not so far future. So, until industry becomes more confident and investors spill more money into the market and lenders loosen up lending guidelines, we won't see these numbers decrease anytime soon.
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