Our rental home has been foreclosed... now what?

[CanaryMelody]

Recently, we found out that our home we've been renting for the past 5 years has been foreclosed. We've been wanting to move out to the country anyway and had been looking for a home with no luck.

 

So now that this house is officially foreclosed, what can we expect?

 

I read that there is a 6 month "redemption" period before the new owners (in this case, the bank) take over. Legally, we don't have to pay rent. So after a couple of months, we'd have money saved up to move. But what happens in 6 months? Will the bank force us out? Will we have a period of time before eviction starts?

 

I'm worried because we have been looking for a year for a new home to rent and although we have looked at a dozen homes, we have yet to find one that is within our price range and fits our requirements (i.e. 3+ bedrooms, accept dogs, etc.). What happens in January when the 6 month redemption period is over and we still haven't found a home?

 

The only plan we have at the moment is to pack non-essentials and move them to storage. I'm dreading moving in the middle of winter. :eek:

[Melissa in FL]

This is so different in each State that I don't think anyone here will be able to fully tell you. Here (FL) it wouldn't take anywhere near 6 months. Maybe two at the most. Here you would get a notice in the mail telling you about the foreclosure and they often will offer a tenant cash to move, usually trying to agree on a very quick time period to be out. They have to go through the formal Eviction process so if someone doesn't move in an agreeable time period then they go through the eviction period. That's usually three weeks. After they get the official Eviction then they have to wait a couple of days until the Sheriff can serve the papers. After that the people have 24 hours to move before the Sheriff shows up to hand the house to the owners.

 

I'm sorry you are going through this. I would step up the looking for a new place. Try to find out the laws of MI to truly see how much time you might have.

Melissa

[CanaryMelody]

Here you would get a notice in the mail telling you about the foreclosure and they often will offer a tenant cash to move, usually trying to agree on a very quick time period to be out.

 

In FL, would the notice be mailed to the home foreclosed or the original owners?

 

I'm sorry you are going through this. I would step up the looking for a new place. Try to find out the laws of MI to truly see how much time you might have.

 

We have been. We're facing 2 problems:

1) No money to move on and most places aren't willing to work on letting deposits be paid in payments. We are in a high cost of living area. A couple of months here rent free, though, would help our money issues. Assuming we have a couple of months left in this place.

 

2) Lack of suitable rentals. On our street alone are 5 foreclosed homes. None of which are for rent. Just sitting empty and abandoned. That's metro Detroit for you. :( I am opening up my criteria a bit though and do daily searches through craigslist and Realtor.com

 

The only MI laws I have found state foreclosure followed by a 6 month waiting period. After that? I don't know. And I'm curious as to if we really have 6 more months or can expect to be evicted sooner. I'm not sure who to ask locally about this (for free).

[milovany]

Legally you don't have to pay rent? What about ethically? If you signed a lease, I would think ethically you'd still be obliged to pay. Or get out now. Sorry, I don't see why you should get a free ride just because the owners are having a hard time. Admittedly maybe there's something I don't know about how this all works, but initially that just doesn't seem to make sense to me.

[CanaryMelody]

Legally you don't have to pay rent? What about ethically? If you signed a lease, I would think ethically you'd still be obliged to pay. Or get out now. Sorry, I don't see why you should get a free ride just because the owners are having a hard time. Admittedly maybe there's something I don't know about how this all works, but initially that just doesn't seem to make sense to me.

 

According to MI laws, legally we don't have to pay rent because the house is in a limbo status. Now if the landlords "bought" the house back from the bank during the redemption period, we'd owe back rent for those months. It is recommended that that a tenant save that rent in case this does happen.

 

Ethically, we don't have to because the landlords have told us we don't have to. It was an agreement with them. Legally, they have to pay us our deposit back, too. But we agreed that they didn't have to since we are staying here without rent until we find a home. If something breaks, we have to pay for it. We won't be bothering them.

 

Despite everything going on, we do have an excellent relationship with our landlords. We have sat down and discussed what is going on with them and came to these agreements. Unfortunately, they don't have answers to our questions and they do not intend on redeeming the house. They are done with the house. So I'm just trying to find out will happen if we can not find a home in time. I hope/don't think it will come to that but I'd rather know what's going on instead of being in the dark (like we was when we learned the house was up for auction). We didn't even find out until after the fact... from a notice posted on our front door.

 

I guess our last resort plan would be to move in with family down in Texas since we have no support here. That would leave hubby up here to work and continue looking for a suitable home...

Edited August 2, 2010 by cbmrj777
clarifying & correcting grammar

[SonshineLearner]

Actually, if anything, I think they'd owe the $$$ to the bank, and not to the past "owners". At least that's the way I've heard it on People's Court :)

[StephanieZ]

http://www.michigantenants.org/foreclosure

 

From the above, it looks like you get at least 90 days after foreclosure OR the terms of your current lease.

 

It also sounds like AFTER foreclosure, the old owner has a 6 month "redemption period" before the ownership is actually transferred to the new owner. It looks to me that your 90 days starts AFTER that 6 month redemption period. So, that looks like 9 months total to me.

 

Here is a listing of MI legal aid organizations

 

http://www.michiganlegalaid.org/findOrgAll

 

I would start calling whichever one seems most applicable/local. If they can't help you learn what your rights are and what to expect, then ask them who else to call. Hopefully, one or another will be able to get you the information and guidance you need. I'd just call one after another until I got help. Eventually, you'll luck into a really helpful person. Obviously, you are not alone, so someone will probably be able to direct you to an excellent resource soon enough. :)

[StephanieZ]

Another thought: On rent.

 

I would go straight to my bank and start a special savings account. Put all your rent monies in there, on time, every single month. Do that until a lawyer or agency you trust advises you otherwise.

 

If you are lucky, you'll get to keep that money and pay it towards your next home. It might just add up to quite a lot. Best case, you'll also get some spare cash from the new buyer of the foreclosure as incentive to move. If you are unlucky, you might have to pay much of the "saved" rent to whoever you owe it to (who knows!)

 

But, in any case, you'll have clear evidence that you are acting in good faith by essentially setting up your own personal "escrow" account for the rent monies. . . not trying to get away with "stealing" it.

 

I wouldn't tell the landlord or new or old owners about this handy savings account until/unless directed to do so by someone you trust. I'd just tell all the new/old owners and bank(s) that you are awaiting instructions from the government/sherriff/lawyer on what to pay to whom before you pay any further rent. . . And, of course, you will be expecting compensation for moving expenses/etc as permitted by the law. . . and so you are withholding the rent for now. . .

 

Obviously, this runs some risk, which is why I'd really want to talk to a lawyer as soon as possible.

 

good luck!

[Kari C in SC]

I don't know the answer to your question. I am a landlord and when advertising my house last month, I had at least 5 people grill me on whether my mortgage was current or if my house was in foreclosure. I thought it was strange that they were quizzing me on my finances when usually it is the other way around. I asked one of the people about it and he said that tons of landlords were pocketing the rent, not paying the mortgage and leaving the renters with a big mess. One landlord actually let 30 properties foreclose. Crazy!

[Entropymama]

Have you tried contacting the bank? If you let them know you're the tenants they might agree to keep you informed about the timeline. Or if you have a good relationship with the owner they might tell you. I've heard of situations where the bank will allow you to stay, but I think you have to pay rent to the bank. At any rate they have to give you sufficient time to move (how long that is depends on your state laws) so it might be worth it to stick around until you get that notice. On the other hand that might mean settling for another rental you're not thrilled with.

 

Good luck!

[CanaryMelody]

Another thought: On rent.

 

I would go straight to my bank and start a special savings account. Put all your rent monies in there, on time, every single month.

 

A separate savings account is a great idea! :D

 

And thank you for the link to legal aid groups. I will definitely start making some phone calls!

[CanaryMelody]

I don't know the answer to your question. I am a landlord and when advertising my house last month, I had at least 5 people grill me on whether my mortgage was current or if my house was in foreclosure. I thought it was strange that they were quizzing me on my finances when usually it is the other way around. I asked one of the people about it and he said that tons of landlords were pocketing the rent, not paying the mortgage and leaving the renters with a big mess. One landlord actually let 30 properties foreclose. Crazy!

 

Wow! Yea... as we are looking at houses again, I'm worried we'd get into another situation like this. I'm thinking of starting to ask about mortgage status and such. I never would done so before. I'm much more cautious now.

[CanaryMelody]

Have you tried contacting the bank?

 

Not yet. I thought of that but hubby is hesitant to call the landlords to get the bank's information. Last time he called, the landlord admitted to having his "head stuck in the sand", still. :001_huh:

 

Hubby also thinks if we contact them, they'd push to kick us out right now. I don't think this would be the case... I think we'd come to an agreement with the bank. But hubby and I are butting heads on this one, either way.

[Melissa in FL]

In FL, would the notice be mailed to the home foreclosed or the original owners?

 

 

In FL after foreclosure there would be no further contact with the original owners because they would have know from prior contact about the foreclosure. There is no redemption period here in FL. After a house is sold on the court house steps in foreclosure the house is the new owners.

 

My FIL has worked as a Realtor for different banks for years selling foreclosed properties. It would be left up to him to get possession of the house back for the bank. He would either mail a letter with different options or he would stop by the house and try to work something out with whoever lives there. He works with several investors and if he knew the house had long term tenants in it he would probably try to get an investor to buy the house and leave things as is. But he is unique in that. Most foreclosure realtors would just evict the people living there and put the house on the market.

Melissa

[Melissa in FL]

Legally you don't have to pay rent? What about ethically? If you signed a lease, I would think ethically you'd still be obliged to pay. Or get out now. Sorry, I don't see why you should get a free ride just because the owners are having a hard time. Admittedly maybe there's something I don't know about how this all works, but initially that just doesn't seem to make sense to me.

 

Who would she pay? The original owners no longer legally own the house. Should she pay them for a house they don't own? Should she pay the bank that now owns the house? Banks are not set up to have tenants and wouldn't have any way to really take rental payments. They'll want to sell the house and get it off their books as soon as possible. The OP should save the money for finding a new place.

Melissa

[GoVanGogh]

Not yet. I thought of that but hubby is hesitant to call the landlords to get the bank's information. Last time he called, the landlord admitted to having his "head stuck in the sand", still.

You should be able to find out the bank info by looking at your county tax appraisal information on-line. That said, our county is way behind on updating that information. But you could at least start there.

The bank may or may not file eviction papers against you. (That stuff goes through the county sheriff office.)

We just went through a bad situation with the house next door to us. One of the owners walked on the mortgage over a year ago. Her estranged husband moved back in and was 'squatting,' living free because their bank was back-logged and hadn't filed formal eviction papers. We were able to contact the bank and inform them of the situation, which prompted them to move quickly on evicting. Totally not relevant to your situation -- but our recent experience w/foreclosures. We were told that in this area (N Texas) that the banks are 2 years (!) behind on evicting and selling at auction.

[celticmom]

The information about the bank is probably a matter of public record if forclosure proceedings have already started. Legal Aid may know how to find out for free and a title search could find the answer for a price. I think that I would contact the bank if possible and see if you can talk them into letting you stay as tenants. Another possibility is that some banks are hiring/allowing people to stay in foreclosed properties so that the houses are maintained and there is no theft. You could check into that possibility for other nearby houses.

[Melissa in FL]

I don't know the answer to your question. I am a landlord and when advertising my house last month, I had at least 5 people grill me on whether my mortgage was current or if my house was in foreclosure. I thought it was strange that they were quizzing me on my finances when usually it is the other way around. I asked one of the people about it and he said that tons of landlords were pocketing the rent, not paying the mortgage and leaving the renters with a big mess. One landlord actually let 30 properties foreclose. Crazy!

 

Oh Kari, it's a HUGE problem here right now. Most of the homes my FIL is getting have tenants in them that had no idea their homes were in foreclosure. A lot of people are walking away from their homes and renting or buying new homes before their credit is ruined with a foreclosure and then renting out their old homes and pocketing the money. The tenants don't even know there was a problem with the house until they hear from my FIL after the bank already owns the home. It's so sad.

Melissa

[CanaryMelody]

Doing a little reading at one of the links StephanieZ posted, and it does say that during the redemption period rent should be paid to the landlords. So in one place I read legally I don't have to and another that I do. Not that it matters for us because we have come to the agreement with the landlords not to pay rent and we won't push for our deposit back. We're definitely saving the rent, though, for moving or in case the landlords change their minds and want their rental money.

[milovany]

According to MI laws, legally we don't have to pay rent because the house is in a limbo status. Now if the landlords "bought" the house back from the bank during the redemption period, we'd owe back rent for those months. It is recommended that that a tenant save that rent in case this does happen.

 

Ethically, we don't have to because the landlords have told us we don't have to. It was an agreement with them. Legally, they have to pay us our deposit back, too. But we agreed that they didn't have to since we are staying here without rent until we find a home. If something breaks, we have to pay for it. We won't be bothering them.

 

Despite everything going on, we do have an excellent relationship with our landlords. We have sat down and discussed what is going on with them and came to these agreements. Unfortunately, they don't have answers to our questions and they do not intend on redeeming the house. They are done with the house. So I'm just trying to find out will happen if we can not find a home in time. I hope/don't think it will come to that but I'd rather know what's going on instead of being in the dark (like we was when we learned the house was up for auction). We didn't even find out until after the fact... from a notice posted on our front door.

 

I guess our last resort plan would be to move in with family down in Texas since we have no support here. That would leave hubby up here to work and continue looking for a suitable home...

 

Very good! Like I said, there's probably something I wasn't understanding.

[Melissa in FL]

Not yet. I thought of that but hubby is hesitant to call the landlords to get the bank's information. Last time he called, the landlord admitted to having his "head stuck in the sand", still. :001_huh:

 

Hubby also thinks if we contact them, they'd push to kick us out right now. I don't think this would be the case... I think we'd come to an agreement with the bank. But hubby and I are butting heads on this one, either way.

 

You should be able to look up this information yourself online. Do a search at your county's property appraiser's office for the property. You'll be able to see all their mortgage documents for the house (including what they owe and paid for the home) and you'll be able to see all the foreclosure paperwork that has been filed with the courts for the house. You should be able to see if they have filed an eviction on the house and contents yet. That will tell you which bank you are dealing with.

HTH

Melissa

[CanaryMelody]

Another possibility is that some banks are hiring/allowing people to stay in foreclosed properties so that the houses are maintained and there is no theft. You could check into that possibility for other nearby houses.

 

That would be an ideal situation since nothing is selling around here anyway. The bank certainly wouldn't lose out and possibly have a house in better shape to sell eventually. The houses on our street are falling apart from neglect. All are bank owned, too. We are starting to see suspicious activity and have seen the cops called out more times in a month that in a year. And 5 years ago this was such a nice neighborhood... :(

[CanaryMelody]

You should be able to look up this information yourself online. Do a search at your county's property appraiser's office for the property. You'll be able to see all their mortgage documents for the house (including what they owe and paid for the home) and you'll be able to see all the foreclosure paperwork that has been filed with the courts for the house. You should be able to see if they have filed an eviction on the house and contents yet. That will tell you which bank you are dealing with.

HTH

Melissa

 

Thank you. :001_smile:

[i.love.lucy]

You absolutely should NOT pay rent to anyone right now. The law is on your side. You are the victim here. That landlord has been pocketing your rent and not paying the mortgage for many months now...eventually resulting in foreclosure. As much as you might think this has happened very quickly I can assure you their bank has given them many, many months to work this out, apply for hardship, yada, yada, yada. The foreclosure departments of most mortgage co have 300 files on each employees desk, so this is not something that happened out of nowhere.

 

If I were you? I'd start putting aside whatever you can each month in anticipation of the move. Start now keeping an eye out for properties, but don't snatch one up. Think about it, if you have 6 months to stash away rent that will pay the moving costs and new deposits elsewhere!

 

And no, the new new owner (bank) does not want your money. They don't have a way to process that as someone said, and they will have written off the loss by now. The house will be transferred from Loss Mitigation to Recovery and they will attempt to sell it. But it will be a while and in the mean time you can save your money. There is absolutely NOTHING morally wrong with you in this situation!

 

See if you can find a nice local realtor to help you find a property. Not a locator service, but someone who will care about you and what you are looking for. Long term good tenants are hard to find, and you will be an asset to the next landlord!

[Samiam]

We just went through this exact situation, although in FL....so some laws will be slightly different and others are FEDERAL laws, enacted due to this high foreclosure situation to protect renters.

 

First, we were notified that it was in floreclosure...NOT OFFICIALLY Foreclosed, but that the proceedsing had started. Per the "server" who gave us the papers, she told us to write a letter to the judge that we had been paying rent, we were not able/prepared to move, to delay the proceedings to give us a chance to save $$$. I did that....never heard back, but we lived in the house for ONE YEAR!!!! We did not pay rent. No one contacted us, ever! It kind stunk being in limbo, not sure what was going on, but on the other hand we saved, saved, saved. Plus I had already been told by the Court Clerk that we had to be notified by the court of any new proceedings (FL law for renter's rights). BTW, we never heard from the owner again at this point. He lived out of town.

 

About one year later, we finally we got a letter from the court that it was OFFICIALLY foreclosed and would be sold at court auction on such-n-such date...was two months from then (probably due to the huge back log of foreclosures in FL).

 

A week after the auction date, we received a letter from the court as to who had purchased it...it was some bank. So we knew things were going to start speeding up at this point.

 

A week later we got a knock on the door, it was a real estate agent representing the new owner (bank), and he was prepared to offer us a "Cash for Keys" deal. He then sent us a letter via Fedex stating the deal. Basically they were giving us $4,000 to move in two weeks, and not damage the property in any way.

 

I did not want move in two weeks, I needed until the end of the month, which would be about 4 weeks. I called the guy back, and told him.

 

At this point, I had done my research. I knew the FEDERAL law was that they had to give me at least 90 days notice to move out or let me stay the end of lease, paying rent (whatever they considered the going rate). But I also read that the Cash for Keys program is legit. Basically banks are not in the business of being landlords, and do not want renters. They want you out, and without damage, so they can sell it. Thus the generous Cash for Keys offer, and why they want you out quick (apparently history shows that alot of people will strip the property before they leave).

 

So anyhoo, I told the agent that I wanted until the end of the month. He said that was a stretch, but sometimes the bank will agree, but then will lower the $$ for Cash for Keys. I told him that I knew my right was to stay the lenght of the lease, which was 9 more months, and I was happy to do that......otherwise they could give me until the end of the month, but keep the $$$ the same..I would not accept a lower amount. He went back to the bank, and they agreed. End of month and $4000 to leave without damaging.

 

End of month came, we packed up, he came over to verifying property was not damaged (btw, per the paper agreement, he was supposed to come take pictures at the begining of our deal, to compare at the end, but he just let me take the pics and email him). We handed him the keys, he handed us a check for $4000 PLUS per the paper agreement our original deposit of $1300 that we had paid landlord.

 

So in the end, for a property that we rented, we ended up living there for almost 1 1/2 years rent-free, hassle-free, and walked away with $5300.00 in our hands.

 

So I have to tell you, DO NOT PANIC! Find out your rights...do not pay anyone rent unless they can prove that you owe them. Once the property is foreclosed, the owner has no right to collect rent, even when it is foreclosure proceedings. Do not move out right away. (I had several neighbors in similiar situations, as we lived in a community that was purchased by alot of out of state owners just to use as rental property, it's like that alot in FL. Many neighbors high-tailed it out as soon as they saw the word "foreclosure" and that's fine, but in the end, it paid off great for us to stay.) Just do not panic. Look up your state laws. Contact your County court, usually the clerk of court. See if you can get any details...they won't usually give legal advice, but can just give you some details. Also see if your county court records are online. Mine were, and each new document was loaded. I could see my letter was received by the judge (it wasn't online, but the date/document was listed).

 

Now get this: So we use that $$ and our taxes and move to a new state...we had been trying to do this for a few years......find a house to rent....a month after we move in...get a notice from the county that it is schedule to be auction in foreclosure auction the next month (again renter's right of noticification)!!!!! OMG, WHAT!!!!! The difference is, this owner, although again out of state, is in contact with us often. He said that yes, he was struggling pay the mortgage, but that was in a loan modification deal with his bank...and sent us the paperwork to prove it. So with our rent, he will be able to get back on track and get it out of foreclosure. So we pay him, and we are getting letters from the court each month to say the auction has been postponed for another month (which is what he said would happen for six months until he shows bank he is good for it, then his loan modification will be approved.

 

The difference in these two situations, why we didn't pay rent in one and do in this one, is the owner is in contact with us...tells us each new update, and then we are gettign official paperwork verifying what he says. In the first scenario, we never heard from the owner again, which basically meant he was pretty much wiping his hands of the property.

 

Do.Not. Panic.!

[mama23]

I don't know the answer to your question. I am a landlord and when advertising my house last month, I had at least 5 people grill me on whether my mortgage was current or if my house was in foreclosure. I thought it was strange that they were quizzing me on my finances when usually it is the other way around. I asked one of the people about it and he said that tons of landlords were pocketing the rent, not paying the mortgage and leaving the renters with a big mess. One landlord actually let 30 properties foreclose. Crazy!

I never even thought about something like that going on. Gee, the things people do these days.

 

If I were in your shoes, I would be saving up every penny that you can and be searching actively for a new place. I would not be waiting around for the bank to come knocking on your door before you start looking.

[missmoe]

We were living in a home that was foreclosed on. Bosket 2 is right on track---do not pay rent. Here in CA, we had 90 days to vacate the property. The bank wanted rent, but in exchange to us being cooperative agreed to no rent. That meant we allowed them access to the property to take pictures, have inspections, ect. That doesn't sound like much, but usually the bank doesn't have any access to the property until its empty. They have no idea of the value of the property. We did have someone show up to clean out the property---we simply told them we were still living in the home. They left, but I do wonder what would have happened if my kids were home alone when they came. I made sure at that point not to have any kids home without an adult.

 

We ended up buying the property. We were able to make an offer that made our mortage payment less than rent in the area by about $200. The bank was willing to work with us, because it meant not having to list the property after the 90 days was up.

[Cricket]

We ended up buying the property. We were able to make an offer that made our mortage payment less than rent in the area by about $200. The bank was willing to work with us, because it meant not having to list the property after the 90 days was up.

 

I was wondering if that was a possibility--talking to the bank and letting them know you would like to buy it (if you want to, that is). You could show your history of paying rent on time. The bank might be happy just to get rid of the house. With the value of property now, the house payment might be less than the rent you were paying.