Real estate professionals have been surprised to learn that the wave of foreclosure-related incidents, which have been sweeping across the US are not only affecting homeowners but renters as well. Recently everyone has become aware of how the mortgage and housing crisis is affecting mortgage companies and homeowners, not many people realize that renters are being evicted in record numbers due to the fact their landlords have fallen behind on their monthly mortgage payments.
Landlords and banks have no legal obligation to notify tenants when leased or rented properties enter foreclosure. Often times they are unaware that there is a problem until it is too late. Many come home to discover an official eviction notice from the bank posted on the front door.
To make things worse, many of these displaced renters lose out on cash security deposits because some desperate landlords have pocketed the money and vanished. Now the tenants have to come up with extra cash to start over again, which means money for deposits, first months rent, and moving expenses. How many of you have enough money saved to move if you were suddenly evicted?
Those reentering the rental market find that due to a shortage of available rental units, finding comparable housing in the same price range is a challenge. Millions of homeowners have moved from homes because they sold them to avoid foreclosure or lost them to repossession. Those former homeowners are now renting or leasing, adding significantly to the number of renters in the USA. But during the 2000s, as home prices surged, builders and developers focused on single-family construction and shifted away from the creation of rental units. So the rental market is experiencing a sudden spike in demand at a time when the supply is inadequate. That bodes well for investors who are landlords, but puts additional obstacles in the path of evicted tenants quickly and urgently seeking affordable housing options.
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