washington state foreclosure :: SoundBiteBlog.com

Some tenants are better than others. Yet no matter how ethical a tenant might be, or how diligent in paying the monthly rent, even terrific tenants can get badly hurt by a foreclosure.

Landlords don’t usually discuss their financial problems with their renters. Why would they? If the property owner is falling behind on his/her mortgage payment, they fear that if the tenant finds out, the tenant might just follow suit and quit making the rent payment. And the landlord, headed for foreclosure,  needs money badly. Tenants of rental properties are often among the last to know about a pending foreclosure.

A landlord’s  foreclosure leaves a tenant in a precarious position and can potentially have a lasting effect on the tenant’s future ability to rent as well as throwing the tenant’s life into disarray while they scramble for housing unexpectedly. The scramble for a new home is a short-term problem. There are other pitfalls for renters, that can last for years beyond the foreclosure, and have a much more significant impact on the renter’s future.

When a lender “takes back” a home through foreclosure, the lender’s primary goal is to sell the property as quickly as possible. Empty properties are easier to sell than occupied properties. The lender, determined to sell quickly, must take steps to make the house as sell-able as possible. These steps often include emptying the house of it’s occupants. In other words, and eviction takes place. And here is where tenants can get hurt.

An eviction is a formal, legal action. Many legal actions are part of the Public Records. And Public Records are part of a Credit Report. So a tenant can end up with an Eviction on their Credit report! This can happen even if the tenant does not fight the eviction. Many lenders will “follow protocol” just to be sure future litigation cannot happen. Protocol in this case is a legal eviction. The lender, wishing to have a perfect “paper trail” of documents, can insist on following the letter of the law with regards to an eviction. They insist on following the process to it’s bitter end.

The ripple effects of the current mortgage market continue to surface in unexpected ways.  If you are a renter and find yourself in this unpleasant situation, document everything (make copies of any communications, and make written notes of any verbal conversations). You might want to consider speaking with legal counsel just to be safe. And make copies of all your rent checks (front and back) in case you ever need to prove that you made all your rent payments on time.

Share on Facebook

Posted in Credit Bites, Foreclosure, Miscellaneous, Real Estate Bites | 3 Comments »

Tags: bremerton real estate, kitsap real estate, port orchard real estate, poulsbo real estate, silverdale real estate, washington state foreclosure

Life can be overwhelming at times. It happens to us all. There’s information overload, the mounting costs of everything from gasoline to college educations, the internet explosion, health care cost increases, international strife, the whole political tennis match, FHA reform, rising foreclosure estimates in America and the day-to-day business of living while raising families. Have you tried to help your children with their homework lately? It’s no wonder many Americans consider “letting the house go back to the bank” as a viable solution to the ever-present stress of living life.

As a solution to debt problems, Foreclosure may not provide the financial relief some homeowners are seeking. Rather than ending up with a more managable budget after foreclosure, many consumers are horrified to find they must still make payments to a lender on a home they no longer own. The problem didn’t get better, it got worse.

Homeowners with significant equity in their homes tend to fight vigorously to save them. Homeowners who believe they have little to lose in equity, are more apt to “throw in the towel” when financial times get tough. These homeowners often get hurt the worst. And its not uncommon.

A deficiency balance occurs when the proceeds of the sale are insufficient to cover all the costs associated with the property being sold. First, there is the mortgage (sometimes there are more than one). Then there are late fees, attorney fees, court cost and any penalties that were assessed during the Foreclosure process. Sometimes there are back taxes that must be paid and unpaid utility bills. Once all these amounts are added up, they often exceed the amount of money generated by the sale of the property by tens of thousands of dollars. Now the homeowner is a renter with a huge liability owed on a home they no longer own as well as the cost of rental housing.

One of the hardest things for any of us to do is to keep a clear head while under financial pressure. It is the one time we can ill afford to make a poor decision. A decision to allow a home to be foreclosed that results in this scenario, does nothing to alleviate the stress a homeowner with financial trouble is under. It just prolongs the misery. Think twice before “throwing in the towel”. Is there ANY other way to work your way out of this tight spot?

To make matters even worse, if the Lender decides to “Forgive” the deficiency balance, don’t be surprised if the IRS labels this as Income and demands taxes on the money. They have done it many times in the past.

Share on Facebook

Posted in Bites of Washington, Credit Bites, Foreclosure, Miscellaneous, Mortgage Bites | 5 Comments »

Tags: Foreclosure, kitsap real estate, washington state foreclosure