Unfortunately, your sister is obligated to pay rent until the foreclosure. Unless the mortgage was perfected AFTER your sister's lease went on her occupancy will be terminated by the foreclosue unless there is a "Non-Disclosure Clause" or the lender subordinated to the lease. Most lenders require an assignment of any leases & in return offer the "Non-Disclosure".

/tricia

I'm sorry...I'm tired today. That should have read "Non-Disturbance Clause"!

/t

I was under the impression that the "cash for keys" program pays the owner, not the renter.

A link that might be useful:

Buyers' Revenge: Trash the House After Foreclosure
Banks Pay People Off To Deter Home Rage
www.creditbubblestocks.com/2008/03/buyers-revenge-trash-house-after.html

My understanding, and its only from what I've read online so I may be wrong...is that the cash for keys applies to whomever is in possession of the home, be it renters or owners. Banks are offering it as an incentive for the occupant (owner or renter) to get out of the home without damaging the home and also without forcing the banks to go through an eviction process. Since my sister is occupying a home that is in the forclosure process, I believe she would be the one benefitting from the cash for keys. As I say, I'm unsure, and appreciate any responses that would clarify this.

cordovamon,

If there is such a program that would benefit renters it would be institution to institution. There's certainly not some type of organized program. Maybe, some of the large mortgage companies, like Countrywide, are doing something like you describe? DH's says he's not heard of such a thing...they evict, if necessary. They do give "Non-disturbance Clauses" on rental property, if requested in return for an assignment of any leases.

Your sister could call the legal firm that mailed her the foreclosure notice & just ask...

/tricia

Thanks Tricia -- I think I was just looking for any ray of hope for her that she wouldn't be out so much money with making another move and very possibly losing her significant security deposit to an unscrupulous landlord who wasn't even paying his mortgage.

Thanks for the reply, I'll tell my sister her best bet is to call and get everything clarified as soon as possible.

And I would think it would be in your sister's best interest to have some kind of third-party verification that when she leaves all things are in good shape. This so she can take her landlord to small claims to get her security dep. back (if necessary) and so no damage occuring after she leaves can be attributed to her.

Who's she paying the rent to, now? I have seen mortgages that have placed a lien on rents.

Molly~

Molly -- she's sending her rent directly to the landlord who has been taking her rent and not paying his mortgage. For her to get the notification only 2 months after moving in that the home would be sold at auction may mean that he hadn't paid his mortgage for some time before she even received notification that the home was in foreclosure. After she contacts the mortgage company is it possible they'll ask her to pay the rent to them, or will she still continue to pay the landlord that is pocketing her rent?

cordovamon,

If the lender got an Assignment of Rents from the borrower/landlord...then, yes, it's possible she'll be requested to pay her rent to the lender. If there's no assignment then the rent will continue to the landlord until the foreclosure sale.

Your sister should phone the law firm that sent the foreclosure notice. The lender probably won't talk to her much due to privacy laws. She'll get more from the attorney...at least from the standpoint of what it all means to her specific situation. The attorney will not give her any information regarding the landlord/borrower.

/tricia

Would your sister be interested in buying the home? If so the following might be helpful. Link below.

"As long as the bank knows that the potential buyers are working on getting the home and can document the mortgage process as it goes along, they will be willing to hold off on the eviction process for a reasonable length of time. They will not want to pay to evict someone through the court system if the current tenants are trying to buy the house. However, they will not wait forever for the loan to go through, and a closing date should be sought after as quickly as possible. Every minor delay or setback can cause the bank to change its mind, decide not to extend the contract, and pursue the process of forcefully removing the occupants and list the property on the open market. Time is of the essence in this situation."

A link that might be useful:
ezinearticles.com/?The-House-Youre-Renting-is-in-Foreclosure

Thanks for the link dreamgarden -- I'll forward it onto my sister.

Something doesn't add up. Wouldn't the bank be more than happy to have a tenant who continues to pay rent on time? It seems to me that all that would change is what name your sister puts on the rent check. I guess banks aren't in the landlord business, but it seems like there would be a property management business they could outsource the daily hassles to.

That, or the bank could sell to someone else who wants to purchase a tenant-occupied property.

I just don't see why her eviction would be mandated; it should be only at the discretion of whomever becomes the new owner.

Triciae said "Unfortunately, your sister is obligated to pay rent until the foreclosure."

That doesn't sound right to me. Your sister needs to consult an experienced landlord/tenant attorney as soon as possible in order to find out her rights. I certainly would NOT rely on the foreclosure attorney for any kind on objective advice. Considering the amount of money at stake, she needs competent counsel representing HER interests.

Since her lease started only last month, it sounds to me like the landlord knew or should have known that s/he couldn't perform his/her end of the contract, which would make it a fraudulent transaction and void ab initio. If so, your sister would have no obligation to perform her end of it.

Good luck to her!

I agree--get a lawyer!

Thank you to everyone for your suggestions -- talked to my sis this afternoon and after a very long stressful weekend her landlord finally returned her calls this morning. He has agreed to rip up the lease and is letting her use the security deposit (2 months rent) for May and June rent (she's already paid April rent). She said he seemed embarrassed and apologetic, I told her to get the whole agreement in writing so he can't come back and sue her or evict her for not paying rent. She will still have the expense of another move and utility hook ups etc, plus the hassle of moving again, but it's not as disastrous as it could have been.

I guess I never thought about the fall out of this whole housing mess affecting renters, but according to what I'm reading online, it's very common now.

She should definitely get an agreement in writing and not take the landlord's word that he will just rip up the agreement and allow the security deposit to be used toward rent.

Something doesn't add up. Wouldn't the bank be more than happy to have a tenant who continues to pay rent on time?

Banks are not in the business of being a landlord.

When I worked for a trustee's office that handled foreclosures, Cash for Keys, was something that the lender would offer the OCCUPANT of the house to head off the costly eviction process. The auction date would have come and gone with the bank owning the house. Then the bank would have to get physical possession of the property through the eviction process. Cash for keys was dangled to save time and money. Once the house was empty, the lender could turn around and market the house for sale.

My daughter lives in a apartment that is being foreclosed on and has been contacted by the bank agent. This is definitely not in the same price range of course, as your sister. But she was given $1,000.00 in exchange for just getting her stuff out in two weeks and "sweeping the floor" when she left. The agent called it cash for keys. I'm hearing this more and more. We live in a small community and maybe not as much money at stake.

I am currently looking for a house to rent and I am concerned about what would happen if the property owner went into foreclosure. Is there anyway I can research this prior to renting a property? Is there a web site I can use to find out if the owner is current on their mortgage?

You might not be able to find out if they are current on their mortgage, but you can see if they are current on their taxes. If they are late on their taxes, they might be having financial issues. Just a thought.