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Mortgage Foreclosure Process - How Foreclosure Affects Renters

Many people tend to think that if they are paying their rent on time, abiding by the terms of their lease, and not doing anything illegal, that they do not have to worry about being evicted. While that would not nice, it is not true. Renters do have to be concerned about any liens that are on the property because of a possible foreclosure action that could be taking. Just because you are paying the landlord money does not mean that he or she has been paying the mortgage company.

Whether it is the owners of the property living in the home or renters, once a foreclosure is completely finished, everyone has to leave the property and never look back. Even though you may not want to worry yourself every day about this type of thing, it is something that you should be aware of as a renter so that you are aware of your legal rights and what you should do in the event anything like this happens to you.

The Foreclosure Process

Foreclosure usually happens after a mortgage loan goes ninety days past due although this could vary in certain circumstances. Each state has their own laws and loops that have to be jumped through in order for a foreclosure to be completed. Because of this, you could be looking at anywhere from forty-five days to a couple of years. If the home goes all the way through the foreclosure process and it ends up at auction, that may still not be the end for the property or the renters.

In some states, there is something called a redemption period. This is a set amount of time after the property was sold at auction where the previous owner could claim it back. This usually requires the homeowner to come up with the total amount owed to the bank for the home. The total amount is not just the past due amount, but the complete payoff amount owed to the mortgage company. While it is rare that someone is able to come up with that kind of money, it does happen from time to time.

What You Should Do As A Renter

The moment you learn about a foreclosure process beginning on the property you are in, you want to make sure that you are aware of the auction date. You need to know how much time you have before the sale of the property. It is also important to make sure that you learn whether or not your state is a state that gives the property owner a redemption period after the auction of the property.

Once you have all of that information you will want to start saving your money. Talk with your landlord if you can and see if he or she is trying to save it from foreclosure or if the house is just being let go. If the landlord is trying to stop the foreclosure then make sure that you are not moving out just yet but keep saving your money. You have the legal right to remain in the property until the end. This could mean the auction date, the eviction date, or the end of the redemption period.

Laws To Abide By

You will want to remember that you are still a tenant and your landlord is still your landlord, even if the house is in the middle of a foreclosure. You are still obligated to make your monthly rent payments or you could be evicted, lose your security deposit, and possibly be stuck paying the remaining amount of money owed on your lease. If you have a landlord that is a little understanding, then he or she may allow you to not pay the rent in order to save for a new place.

Make sure that you are not spending any of that money until you are ready to leave the property because your landlord still has the right to ask for it since you are under obligation to the landlord. If the foreclosure goes all of the way through and you are forced to leave the property, you have the right to receive your security deposit back because it was the landlord that failed to follow through with his end of the lease, not you.

All in all, the foreclosure process can be a tricky and sensitive situation for tenants as they may not be left with a lot of options. Just make sure that you are learning the laws of your particular state and get as prepared as possible for a quick move.