Few of the thousands of renters here in Chicago consider this problem.
With the slowdown in real estate sales here in the city and the suburbs, the rental market has improved. There is more demand for rental housing - single family houses or townhouses, condominiums, or old-fashioned rental units in larger apartment buildings.
Add to this fact that many homeowners who can't sell turn to renting out their property, with short-term intentions.
Unfortunately, a sizable percentage of these "landlords by necessity" are not current with their mortgage payments on their investment properties, and these rental properties may be soon subject to foreclosure, and acquisition by the bank who holds the mortgage lien!
Roughly 40% of all foreclosures involve property being rented, according to RealtyTrac. Here in Chicago, the Lawyers' Committee for Better Housing warns that as many as 2,500 renters and their families may be displaced by a landlord's foreclosure by the end of 2008.
Keep in mind a tenant's Security Deposit might be lost as well, should the foreclosure go through. Here in Illinois, and in many other states, the acquiring bank is not forced to refund the security deposit.
A newly-enacted Illinois law does offer a bit of protection, however. According to Kathleen K. Clark, Lawyers' Committee Executive Director. "If the tenant wasn't named as part of the foreclosure filing and is being taken into eviction court, they must be given 90 days notice," she said. "It's not a tremendous help, but it does give them a little bit of time."
The law also provides for confidentially of all court records pertaining to a tenant evicted by the bank due to his landlord's foreclosure. Law enforcement agencies and certain government entities would still have access to these court records.
In order to take advantage of the 90-day notice requirement, however, the tenants must be current in their rent, or have made good-faith, but unsuccessful, attempts to keep payments current. This requirement prevents tenants who find about about their landlord's impending foreclosure to stop making their rent payments.
See our post today @ BlogChicagoHomes.com for more info, as well as a link to Mary Umberger's column in yesterday's Chicago Tribune Real Estate Section.
DEAN & DEAN'S TEAM CHICAGO
This is a terrible problem nationally. Renter's do have resources available to them that they can turn to for information. Renters can check online, for free, to see if their landlord is facing foreclosure at www.rentalforeclosure.com and renters that find themselves in this situation can turn to the Metropolitan Tenants Organization for guidance at www.tenants-rights.org
As Shawn said, it's not just in Chicago. The interesting thing here is that tenants who are being forced to move are finding out that now that prices have come down as drastically these past two years as they went up in the years before that, they can actually afford to buy a home, and many are.