#home in rent
How to Rent a Home in Foreclosure
A homeowner is in default of his mortgage once he misses a payment. The lender then issues the homeowner a Notice of Default or Lis Pendens , depending on jurisdiction, which informs him of his past-due status and warns of the house being auctioned off if the mortgage is not brought current. The delinquency is made public at this stage and included in pre-foreclosure lists, marking the starting point of the foreclosure process.
Locating Pre-foreclosure Properties
Since pre-foreclosures are a matter of public record. you can find listings at the county clerk’s or recorder’s office in the area you’re interested in. Look for Notice of Default. Lis Pendens and Notice of Sale documents. The Notice of Sale informs the homeowner of the date and time his house is scheduled for auction. It is the lender’s final warning notice and last opportunity to catch up on his mortgage. Another option is reviewing newspapers and business journals for default notices, since lenders are required to publish them. Numerous online real estate sites, such as RealEstate.com. RealtyTrac.com and Zillow.com. also provide pre-foreclosure listings. You also can check with real estate agents in the area.
Once you have identified a pre-foreclosure property, contact the homeowner to discuss renting it. Pre-foreclosure properties are still in the homeowner’s name, so your rental agreement will be with him. Keep in mind that if and when the house is foreclosed upon, the new owner may not renew your existing lease or enter into a new one with you, especially if that new owner is a bank. This means you may end up looking for a new residence sooner rather than later.
Because of this risk, negotiate lease terms with the landlord. Ask to waive the security deposit, since it may be difficult to collect later because of the landlord’s financial challenges. If landlord refuses, negotiate a clause that requires him to give you a copy of the Notice of Sale within five days of receiving it from his lender. This way, you know the date and time of the scheduled auction and can prepare accordingly. Also include a provision that allows you to apply your security deposit to rent anytime after receiving the Notice of Sale. This is another way to prevent loss of your security deposit.
A landlord facing foreclosure may delay or stop making repairs. Add a lease provision that requires the landlord to fix issues within a specific amount of time and, if he fails to do so, permits you to hire a professional and deduct the repair cost from rent.
You are protected under the Protecting Tenants at Foreclosure Act. which requires new owners of foreclosed homes to let existing tenants stay until their lease expires. However, if the new owner plans to move into the residence, or your existing lease is month-to-month, he must give you at least 90 days advance notice to move out so you can make alternative living arrangements. Although the PTFA expired at the end of 2014, many lenders continue to follow its requirements, especially since a bill was introduced in March 2015 to make these requirements permanent law.
Fannie Mae Assistance
If Fannie Mae forecloses on the home you are renting, you may be in luck. This is because Fannie Mae often goes further than the PTFA in protecting renters. Under its Tenant-in-Place Rental Program and Mortgage Release (Deed-in-Lieu of Foreclosure) Program. you may be eligible for a new lease with Fannie Mae, either month-to-month or one year, and relocation assistance. To see if you qualify for either program, contact Fannie Mae at 1-800-732-6643.
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Written by CREDIT