Any advice for our landlord possibly going into foreclosure.
October 23, 2011 8:28 AM   Subscribe

Landlord possibly going into foreclosure...what can we expect?

We live in DC and signed a lease that ends in June of 2012. We believe that the landlord is going to let the house go into foreclosure. Here are the details:

1. Landlord purchased house in 2000 for $115,000
2. Renovated home in 2004
3. Took out a new loan for ~$330,000 in 2006 through Chase
4. Owes a balance of ~$295,000 as of August of 2011
5. Home is worth between 250,000 and 325,000 depending on estimates
6. Was more than 1 month behind on her mortgage as of October of 2011
7. A man came to our door this week asking for the owner. When we said we were the tenants, he said that he was here to do an internal inspection for the mortgage company, but did not come inside. My husband told him to contact our property management company, but he left before getting the name.

So, what do you the house going into foreclosure?

Additionally, I know that if the house does go into foreclosure, we will need to get a lawyer, but I'm looking for any personal experiences that anyone has had with a similar situation or any insights anyone has. Our property manager is not any help.

I know from doing research, DC is a non-judicial foreclosure state. Does anyone have any type of experience with this type of foreclosure? How far behind in her mortgage does she have to get before they start the foreclosure proceedings? What should we expect in terms of a foreclosure auction? We would actually be interested in purchasing the home, how strong of a position would we be in do this? Does anyone have experience with this?

Any insights would be helpful. Thanks!
posted by Shark Tail to Work & Money (5 answers total) 1 user marked this as a favorite
If you're interested in purchasing the home, you may want to get a pre-approval for, say, $300k and see if your landlord is interested in a short sale.
posted by Oktober at 10:23 AM on October 23, 2011

DC has very strong tenants' laws. Even if the house is foreclosed on, you will at least be permitted to stay through your lease. In addition to the link above, you should also check out Office of the Tenant Advocate to get a better understanding of your rights as tenants.

DC also has a right-of-first-refusal law for tenants whose landlords sell their properties. That doesn't mean you have a right of first refusal in any foreclosure sale -- if it goes to auction and a third party's bid is accepted, the third party gets the house -- but if the lender becomes the owner and puts it up for sale, you as the tenant have the right to make an offer, and you get some generous timelines in which to do so. (Here's a good Q&A on this in the Post from a couple of years ago.) If you want to exercise those rights, you will definitely want a lawyer. If you just want to stay on as tenants through your lease (and possibly renew with the new owners, should that happen), you probably don't need a lawyer, though it's never a bad idea to get solid legal advice from someone knowledgeable about this stuff.

As for whether the house is going into foreclosure, it's impossible to say. Last spring, we got several pieces of mail at our rental house (in the Maryland suburbs of DC) suggesting that our landlord's lender was foreclosing on our house, but it never happened. So you may be seeing things that suggest foreclosure that might just be the lender trying to put the fear of God in the owner. Or that could be totally unrelated. (For instance, we are pretty sure that our landlord got the foreclosure notice because there was a glitch when she refinanced her mortgage and a payment got missed in that process.)
posted by devinemissk at 10:51 AM on October 23, 2011 [2 favorites]

The only thing that indicates potential foreclosure here is 6: "Was more than 1 month behind on her mortgage as of October of 2011." Foreclosure isn't a rapid process so even that isn't really indicative of anything specific.
posted by DarlingBri at 1:24 PM on October 23, 2011

So, what do you the house going into foreclosure?

The only sure way to find out if your landlord is going to be foreclosed on is to call up the registry of deeds and see if someone's put a foreclosure lien on the property. This is a document known as either a "foreclosure petition" or a "lis penden" depending on the state and it's public record. You should be able to call/visit the registry and find out. You may be able to look up the address online as well.

Even if she is getting foreclosed on, it's very difficult to say how long it would take. Broadly speaking, foreclosures take months, how many months depends a lot on where the house is located. Looks like DC changed its foreclosure laws last fall in a way that will tend to draw out timelines, but you'll have to poke around yourself to find out what's going on now, whether/when foreclosures resumed in the district. I'm sure the Post has covered the impact of the law. Beyond that, over the course of the past year banks have slowed down their filings. There are instances across the country of homeowners who haven't paid their mortgage for 18 months but the banks still hasn't moved to complete the foreclosure. It certainly not safe to take it as read that that will be the case here --- I mention this to say, don't panic, whatever ends up happening is going to take a while.
posted by Diablevert at 1:54 PM on October 23, 2011 [1 favorite]

Look at it this way. You are paying rent. If the bank (or other mortgagee) forecloses on the house, then after a certain point you may be paying rent to the bank. Most of the time, the bank will prefer to keep a rent-paying tenant in the house than have an empty non-income-producing house. I guarantee they already have plenty of those.
posted by megatherium at 2:38 PM on October 23, 2011

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