Renters deal with effects of landlords' foreclosure

12.29.08
By Timothy Jones

If you don't own your own home, you may think that the current foreclosure crisis cannot affect you.

However, if you rent, you may want to think again. An Associated Press article draws attention to the problems faced by millions of renters who find themselves kicked out of their homes after their landlord falls irredeemably behind on their mortgage loan payments.

Those who rent from smaller mom-and-pop landlords may be most at risk, the article says. But few renters are aware of the financial situation of the person who owns the property in which they live.

To help address this problem, Fannie Mae announced that it would introduce a new policy in early 2009 aimed at renters.

People living in foreclosed properties would be able to agree on a new lease with the company while it put up for sale or receive money to move - although details have not yet been finalized.

"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," spokesperson Brian Faith told the AP.

Freddie Mac said it is working on a similar plan. However, not every landlord has a mortgage with one of these firms.

If you are worried about the possibility of your landlord facing foreclosure, Robert Baker of Housing and Credit Counseling suggests investigating the laws in your state, which spell out how long you are allowed to stay in your home after a filing.

Any foreclosure actions, judgments or bankruptcy filings related to your landlord should also be listed in district court records or at the county recorder's office, Baker says. A bit of investigation should help let you know if you have cause for concern.

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Some renters are losing their homes because their landlords have financial problems