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Tenants Will Be Allowed to Stay in Some Foreclosed Properties

Fannie Mae has been working on new policies for landlords in foreclosure. The majority of time, in the past, a tenants will be allowed to stay in some foreclosed properties tenant was evicted from a property in the event of a foreclosure. They were forced to leave, often forfeiting a security deposit and last month's rent. Even if they were current on their rent payments, which was the case, more often than not. And, they didn't have any recourse.

But, Fannie Mae said, this week, that they will let some tenants stay, while a house is advertised for sale. Fannie Mae will sign a new lease with about 4000 tenants. Which tenants are allowed to stay? Does this mean that the sale is subject to the lease? Or must the tenant move upon the sale of the property?

There seems to be some confusion with the new policy, as some consumer advocate groups have indicated that legislation was previously passed, through the bailouts, allowing tenants to stay in their homes in the case of an eviction. But, not everyone had complied with the new policy.

Fannie and Freddie is currently working on loan modifications with borrowers in trouble. They have stopped foreclosures until January end.

This article is authored by Sandy Shores, Melbourne FL Realtor, Brevard County Florida's Space Coast.

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Posted by Sandy Shores - Melbourne FL Real Estate ,Realtor®, M & M Real Estate Inc. on 01/15/2009 08:21 AM

Comments (20)

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Originally posted at: Melbourne Real Estate News, Brevard County FL Real Estate by Sandy Shores REALTOR® : Tenants Will Be Allowed to Stay in Some Foreclosed Properties

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20 Comments on Tenants Will Be Allowed to Stay in Some Foreclosed Properties

JAN

2009

Sandy -

The way I see it, a lease is a lease. No early exit upon sale - the buyer would have to respect the lease, or buy the tenant out.

From what I have read, tenants current on rent and in good standing on the lease will get an opportunity to stay on.

Stay tuned - but it is a step in the right direction, yes?

DEAN & DEAN'S TEAM CHICAGO

Sandy,

Negotiations need to be made on both sides to help a good paying tenant.

4,000 only. If you do for some, you should do for all.

Thanks for the post! This information will come in handy!

Here in MA, tenants already have many more rights that in other states.

Hi Sandy, Good news for some tenants... I wonder if the new lease is a month to month, or how they are structured. In the end, do they still get their security deposits back?? Tenants have definitely been undeserved victims in a lot of foreclosures. It would be good to know the answers to all of the questions in your post :-)

As stated above, a lease is a lease, but what does the lease say? Will it have a clause that the lease is broken upon sale? At least they aren't forced out immediately upon foreclosure.

Interesting....Florida tends to favor the tenants overall. THough, I know some who are not paying rent because the homeis in foreclosure proceedings....what's with that? Regards-Kathleen G

Sandy, there has to be a balance with tenants having nothing to do with the foreclosure on their occupied property and the right of the owner to have them out of there. I hope the laws created are fair for everyone.

It appears that Fannie will try to use their REO listing agents as property managers, which I believe will not help the tenants.

The skill sets needed to manage rentals properties are very different from the skill sets to list REO's. I can see real problems when the tenants have a water pipe break or toilet clog or roof leak at 3AM. Heck, you can't get in touch with listing agents between 9 and 5. And collection of rents is a very different animal if you don't do it all the time.

If Fannie was really serious, they should outsource this function to someone who can put together a package of property management firms to handle it. But I know they're already holding on line training for listing agents, so it won't happen.

Sandy, I think tenants need to run a credit check on some of these landlords, eh?

Hi Sandy

We spoke about this in a class today, here's the question who is the landlord? The lender or the government? There are a lot issues with this the will have to be resolved.

Good luck and success

Lou Ludwig

Even I'm confused by this legislation. I'm glad their stepping in and taking care of these tenants but at the same time 4000 really isnt that many people. Like so many government programs I'm concerned that this process will be confusing and difficult which will still leave many tenants out in the cold. Fred Pickard also makes a great point. How are they going to handle the management of these 4000 tenants. I'm almost certain that Fannie and Freddie don't have the resources. It's a step in the right direction but it already sounds like a huge mess.

Sandy,

This could be a good deal for the tenants.

Ann Hayden freezing in Wildwood, Missouri

JAN

2009

Hi Dean, Yes, it is definitely a step in the right direction. Now tenants can feel a bit more secure in this subprime mortgage mess.

Hi Tony, My thought also was which 4000 were they going to help and what was the criteria for helping them? Just curious. So you think help one, help all...seems to make sense to me.

Hi Heath, Interesting you indicated that tenants already have many rights there in MA.

Miss Mary, I was wondering a bit more about how this was going to be structured, also. Yes, it is great news that tenants should now be treatly fairly in foreclosure situations.

Hi Fred, Yes, a lease is a good thing. A step up from what was being offered before - nothing. They will now be able to stay for a period of time. Good news.

Hi Kathleen, Thanks for the feedback. I don't know why tenants don't pay rent when a home is in foreclosure. Scary for them in a situation like that.

Hi Gary, Agreed, there must be a balance between tenant and owners right in the event of a foreclosure! So true - good point!

Hi Fred, Excellent point - that this will be putting REO agents in the property management business. That couldn't definitely turn into a nightmare. Not well thougt out, is it?

Hi Rich, Great idea for a new post. We have been warning tenants for a while to do a bit of upfront homework on their tenants before handing over any money or signing a lease.

Hi Lou, Good question...who will be the landlord? Lot of unanswered questions.

Hi Justin, I agree, 4000 isn't alot. And who will handle the property management, like Fred asked? I think this could turn into a nightmare.

Hi Ann, This could be a good deal for the tenants. It certainly could help some of them.

Hi Sandy,

Wouldn't you think the people who have paid their mortgages all these years should get a bail out too? Like a nice vacation or something????

Ann Hayden in frozen Wildwood, Missouri It was less than 0 here last night. Wind chills took us to about -10.....BRRRRRR

JUL

2009

Well, I think its pretty crappy when this is done to you. I just signed a lease in May and got served with the foreclosure papers today. The owner never said a word about this to us and we paid him 3 months to move in. I'm just angry that he just did this and took us for granted. I think its cruel! Considering we are people with children in school that now we have to up and relocate, not to mention we gave him all the money we just saved to move so we don't have the funds right now.

Its a shame and I feel that in my case being that the Landlord did a lease knowing he had no intention or paying the mortage and was already in the foreclosure process my least should be
FRAUD and therefore, I should be refunded and given at least 60 days to move.

I will be seeing an Att. but its very upsetting to hear that owners are just getting a slap in the hand and a lower score on their credit for turning innocent people's lives upside down and STEALING their money!!!!!!!

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Sandy Shores - Melbourne FL Real Estate ,Realtor®, M & M Real Estate Inc.

Melbourne, FL

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