Renters losing their homes without missing a payment Adam Doster

Published: Saturday November 17, 2007



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Print This Email This While the housing foreclosure crisis of 2007 negatively impacted many homeowners with shaky financial histories, thousands of families are losing their homes without ever missing a payment. These residents are renters who had the unfortunate luck of living in houses whose landlords defaulted on their mortgages  a large but little noticed externality of the subprime fallout. While it remains unclear many renters have been evicted because of foreclosures, the Mortgage Bankers Association took a survey earlier this year and found that one in eight foreclosures was non-owner-occupied. But the association acknowledges that this figure likely underestimates the problem because building managers have an incentive to register as owner-occupied for tax reasons, even if the units are rented. According to the New York Times, in Nevada, which has one of the highest foreclosure rates in the country, 28 percent of mortgages that were in default earlier this year were for homes not owner-occupied, more than twice the national average. Arizona, Florida, and California, all states hit hard by foreclosures, are well above the national average as well. This is an explosion, said Judith Liben, a lawyer at the Massachusetts Law Reform Institute. This isnt business as usual. These are investors that overleveraged themselves, and the renters are collateral damage in the mortgage crisis. Although the stakes are lower for renters than homeowners, mostly because renters do not stand to lose years of equity, many renters feel blindsided by the news that they could be evicted, especially if they have been diligent in their rent payments. Cash for moving expenses and deposits on new rental properties can also be a financial drain, especially for tenants who had no idea their buildings were in danger of foreclosure. On Thursday, the House passed a comprehensive mortgage act that includes protections for renters. The House act, reports the Times, which the lending industry has opposed, would require new owners to continue the leases of tenants for up to six months after foreclosure. Senator Christopher J. Dodd, Democrat of Connecticut, who introduced similar legislation in the Senate, said in a statement, A foreclosure doesnt differentiate between a homeowner and a renter residing in a defaulting property. Currently, most state or local laws do not provide this protection. Read the whole story HERE.



