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Can I rent a home that is going into forclosure?

My husband and I just went through a short sale on our last house and we are now looking to get into another house. We know we can't get a mortgage for another 3 years so we are looking for rental properties. I was wondering if its possible to rent houses that are going through foreclosure? There are many houses in my area that I would like to buy if I were able to get a motgage, but since I can't I would be satisfied with renting until I can. Please let me know any information on this topic. Thank you.
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December 20 2011 - Viera
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Answers (18)

I would never suggest renting a home that is on it's way to foreclosure. There aren't any benefits to you and you could get caught up in the ugly process of the bank taking over the home. Most homes go to foreclosure in the first 3 to 6 month of the seller not paying the home loan. During that process, anyone living in that home is subject to visits from the banks representatives. It's such a mess. I don't know a sole who would want to be involved in it.  
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February 18 2012
I would suggest finding a local real estate agent to help guide you through the process and I would strongly suggest avoiding renting a property going into foreclosure.
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February 17 2012

Find a Realtor in your area, and have them help you.As a tenant or buyer,you do not pay for any services to Real Estate agents.You should avoid homes facing foreclosures.

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February 16 2012
Also be careful about giving a deposit.  The other trouble is if repairs are needed or the water heater or air conditioner breaks, the seller may not be able to fix it.
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February 16 2012
Sure, why not?  You need to know that you should pay below market rent for the incovenience of allowing buyers and their realtors trapsing through with only 12 hours notice, though.

And technically if you are paying "below" market rent then the foreclosing lender does NOT have to honor your lease and may only have to give you 90 days notice (when they do the final foreclosure judgement auction at the courthouse you will get served.)

It's common to get "cash for keys" of about $2k so if it's worth it to you to have to move, then go right ahead and rent a pre-foreclosure.

Also, the Seller may be foolish to "convert" his former primary residence to a "rental" property by renting to you because he may no longer get the  exemption if he's forgiven money on the short sale of his home.

All the best,
Alma Kee, Future Home Realty
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February 16 2012
Humm,,, Im confused. Why would you want to rent a home that is going into foreclosure? There is no telling how long you can stay in the home, it could be anywhere from one month to a year.
Or are you interested in occupying an home without paying rent until the foreclosure process is complete? I do know that the banks are now working on solutions to avoiding vacant homes because vacant homes= decreased property value and theft.
I would recommend you rent a modest home for a modest price and save your money! Then in three years you will be good to purchase again.
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February 16 2012
Renting a home going into foreclosure is only going to be a haedache. Never knowing when you will have to leave to find another place to rent. There are many issues with a property going into foreclosure
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January 22 2012
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Just like people who rent on month to month base. Renters expect to leave anytime. Most likely, you may get very good deal because of the seller's situation. For some of them, they are free money to them. It may be a good solution to both parties.
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January 11 2012
I've heard about cases when people had to go through a short sale and then their income situation has changed. They called the same bank they had to do a short sale  and ask for another loan. They wrote a good letter with the explanation and they got a new loan from them only 4 months later. Keep in mind, if your situation changes, yoiu still might be able to buy a house earlier than 3 years.
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January 10 2012
Two different agents have used the term "loosing their home"... Is the home too tight or something? 
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January 10 2012
I would not recommend renting a home that you know may be foreclosed on in the near future. Unfortunately this happens quite often in my area. I've heard of several instances here where the owners know they are loosing their home and inadvertantly rent it out to some unsuspecting family from a classified advertisement. My advice would be to call a Real Estate professional or a relatively known local real estate office and inquire if there has been a NOD (Notice of Default) filed on the property. This is a easy quick search of recorded title documents and is a normal process for a knowledgable Realtor to perform. Best Wishes to you.
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January 10 2012
It varies by state with some having to honor reasonible leases and others evicting or paying tenants to move. It is best to contact a local area agent to find out the rules.
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January 10 2012
Leasing a home that is going through a foreclosure may be a waste of your money and time.  You will not be able to settle into the home as you will not have accurate information as to the status of the foreclosure.  Best of luck to you.
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January 08 2012

Shanon Rose is incorrect. A bank cannot evict a person with a valid lease in effect under any conditions.
Until the home is foreclosed, the borrower owns the home and can do with it as he pleases (including renting it out).
If you were to rent the home before it is officially foreclosed on, you have a valid lease and cannot be removed from the home by the bank. This is why banks will often offer tenants of foreclosed properties money to voluntarily give up their lease and leave the property (this money is sometimes known as "relocation assistance."

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January 04 2012
While it is possible to enter into a lease agreement with the current owner, once the bank has foreclosed, that rental agreement is no longer valid, as the owner who entered into the contract no longer has rights to lease the property.
The bank will then go through an eviction process, and while this will not affect your credit, you then are in a position to be displaced and have to find a new home. Additionally, because the new owner has been foreclosed upon, you risk not receiving the return of your security deposit. The bank who now owns the foreclosed property is under no obligation to repay the debts of the owner. If the previous owner did not refund the security deposit you would need to pursue them in small claims court, and they most likely would not have the funds to satisfy the judgment. I would suggest looking for a property that is not distressed and save yourself the headache of potentially loosing money and having to move again. 
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January 04 2012
your best bet is to lease or rent with the option to buy from a seller that is not loosing his property to a bank you will find that many are relocating due to job change
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December 20 2011
I agree, owners that are getting to loose the home probably won't make the best landlords, also I don't imagine that they will spend the money on repairs that may be necessary to get an occupancy permit.
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December 20 2011
I believe the phrase here is Caveat Emptor (Let the buyer beware).  If you rent a house that is going through foreclosure, you risk that your landlord will not inform you in a timely manner of what is happening with the house, and you may be forced to leave abruptly.  If you're the sort of person who wouldn't mind having to move again on a few days notice, it might be okay.  I would also note that your landlord will likely be unable/unwilling to make repairs, as they have no long-term interest in the property.

On the other hand, once the property has been foreclosed, investors frequently come in and flip them into rentals.  I think those are usually a great deal.

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December 20 2011
 
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  • Asked by JBlack22
  • In Rentals
  • December 20 2011
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