What to do if the rental home forecloses

With so many home owners upside down on their mortgage and having trouble making ends meet, some of the home owners who invested in rental property with a high balance mortgage on the property could have trouble paying the mortgage payments.  The first thing to go would be the investment property instead of their primary homes.  It's really sad to see the tenants who are reliably paying rent get caught in the crossfire.

I can not imagine how shocking it must be for tenants renting a home in Colorado Springs only to find out the owner is not making the payments (even when the tenant is paying rent).  Is it legal? yes.  Most tenants assume they need to find a place to live and fast.  However, the good news is there are federal laws in place that protect tenant's rights in this case.  Here is a general summary:

a) If there is a lease in place, the new owner, the bank or finance company will have to honor the term of the lease until it ends.

b) If there is no lease in place, the tenant can stay for as long as 90 days.  There is a caveat to that, though...

•  The tenant has to allow the home to be shown to prospective buyers during that 90 days.
• The tenant must maintain the property

So, the good news is the tenants do not have to scramble to immediatly find a place to live.  It is always good to keep a copy of your lease in a place where you can find it if that happens.  

Another good thing is there is potential for that same tenant to buy that home (if they want to so) from the bank and maybe get a fantastic price on the home.  There are some great programs in the state of Colorado and El Paso County that help people buy a home for as little as $500 down.  The state has CHFA program and El Paso County serving Colorado Springs, Fountain, Monument, Peyton and Manitou Springs offer the El Paso County Bond program that will gift funds for the buyer's down payment.  The buyer does not have to have outstanding credit and usually the interest rates for those programs are the lowest rates.  If you are interested in one of the low down payment programs for any home, please give us a call and we can help you find a home with a very low down payment.  Current interest rates are so low that a buyer will have a lower payment buying a home rather than renting.