Do You Know What Your Landlord Is Doing With Your Rent Money?
Even renters are being affected by the downturn of the housing market in Temecula
, Murrieta and other parts of Riverside and San Diego Counties. In increasing numbers renters are being evicted from their homes through no fault of their own.
These renters paid the required deposits, made their rent and utility payments on time, maintained the property (sometimes even improved it) and yet are being served eviction notices.
Homeowners who are cant continue to make their payments, are becoming reluctant landlords and renting their homes in an effort to avoid foreclosure. While good in theory it seldom works because they cant rent their home to cover the mortgage payment and this negative cash flow along with their new housing expense usually puts them in a worse financial position. They stop making their mortgage payments and keep collecting the rent. So theyve created a cash cow that will last until the bank forecloses and evicts the tenant.
If you are a tenant who has put their homebuying efforts on hold, there are things you can do to protect yourself.
Here are a few:
1. If youre renting a home from a private party and start to receive certified letters addressed to the owner at your address, dont ignore them your landlord has probably quit making his house payments.
2.Youll probably receive more than one if your landlord has quit making their payments. Usually it will be one a month, for each month missed until the bank files its NOD (Notice of Default). If you get one letter and they stop, chances are the landlord caught up on his payments, if they continue its time to CYA (Cover Your Asset).
3.Your next step should be to contact a local Realtor and ask them if they will check public records for your property address and see if a Notice of Default or Notice of Trustees Sale has been filed. Relax, youre not invading your landlords privacy these are public record and available to anyone who requests them, and the service is usually free.
4. If your first check of public records doesnt uncover anything, you have to remain vigilant. If the certified letters continue to be delivered. Its only a matter of time before the notices are filed, which means foreclosure proceedings are in full swing.
5. Im going to preface this next strategy with the disclaimer that Im not giving legal advice and you should consult with an attorney who specializes in this.
Depending on the type of loan your landlord has the chances are pretty good that their is an assignment of rents clause in his deed of trust. Assignment of rents means that in the event the borrower (your landlord) defaults on his payments the lender is entitled to the rents.
Most county BAR Associations have a low cost legal referral organization you can speak with. This also doesnt mean that you are getting a free pass on the rent. Put the money in savings, because the lender may ask for it (they almost never do). If they dont you may have saved a portion of your down payment so you can make the move from tenant to homeowner.
6. If your local area has a lot foreclosures and youve decided to move up from renting an apartment to renting a home, you should repeat #3 for every house your considering.
This problem is reaching epidemic proportion and even the Center for Disease Control hasnt found a way to control the outbreak, so its up to you to do your due diligence. As the old saying goes: An ounce of prevention is worth a pound of cure
by: Greg Cook
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