Families Losing Homes Without Ever Missing Payments

The Sarasota Herald-Tribune reports:

• In the foreclosure crisis of 2007, thousands of American families are losing their homes without ever missing a payment. They are renters in houses whose owners default on their mortgages — a large but little noticed class of casualties. [...] Many renters say they never even knew their buildings were heading for foreclosure. “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.”

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• The [U.S.] House [of Representatives] on Thursday passed a broad mortgage act that includes protections for renters. The House act, which the lending industry has opposed, would require new owners to continue the leases of tenants for up to six months after foreclosure. [...] The House bill calls for new owners — usually lenders — to give tenants a 90-day notice before foreclosure, then continue leases for up to six months after. Renters without leases would have 90 days to leave the property.

Despite a lease that runs until January 2009, one of the tenants described in the story has reportedly already packed all nonessential items in their garage — everything but clothes, linens, cookware and furniture — in case they have to leave in a hurry. Said the tenant: “It’s not normal to live like this. And the worst part is not knowing if we’re going to have a note on the door tonight, tomorrow or the next day.”

For more, see As Owners Feel Mortgage Pain, So Do Renters.

For other stories on tenants unknowingly renting homes in foreclosure, go here, or here, or here, or here. equity skimming unwittingly gamma