Tenants in Foreclosure- Update
I realize that I left you all in the dark on August regarding the auction of the home I live in. On August 17th when I wrote the last post I was still assuming that my home was going to be auctioned on the county steps the following Monday August 23rd. Well, just a couple of days before the auction date I called the trustee’s automated system and found that the auction was on hold and had been postponed until October 4th. So here I am again, just days away from the home I live in possibly being auctioned off.
I called the trustees automated system today and it says the same thing it did in August. The home is on hold and scheduled to be auctioned on October 4th. This puts me in a difficult position. My rent is due on Friday and I always pay on the 1st even though I have the five day grace period. I emailed the landlords to see if they can provide any updates, but to date their updates have been less that truthful or helpful.
Since my lease does allow me a five day grace period I think I will just hang onto my rent until I am assured that it is not sold on the 4th. If it were sold that would mean the landlords would receive rent for the entire month of October even though they only owned it for 4 days.
More to come next week…
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Tenants in Foreclosure- Update
A New Team Member!
My name is Josh Gordon, the new Program Coordinator for Financial Beginnings. I joined the Financial Beginnings team at the end of August. I came here because our communities desperately need young people to receive a financial education. I am extremely happy to be here and I want to tell you all a little about myself and my role.
I graduated from Willamette University in 2009 with a Bachelor’s Degree in Economics. I excelled in finance, accounting, and mathematics and I am confident my academic success will be an asset at Financial Beginnings.
Before starting at Financial Beginnings I worked in financial planning, real estate, law, information technology, and sales. I plan to draw from my previous experiences to expand the capacity of the Financial Beginnings program.
I bring a fresh perspective to the team and my primary ambition is to identify new opportunities for Financial Beginnings. Over the next year I will be actively involved in volunteer recruitment, training, and management. In addition, I aim to increase the number of students educated via the Financial Foundations and Banking on Our Future programs by 20-30%. To achieve this I will expand our programs into new schools and into new regions. I will look for opportunities not only in schools but also in community organizations, local businesses, and our existing network.
Throughout the coming months I will develop and launch a series of teacher training workshops. It is vital teachers are equipped with the correct information and resources in this era of financial uncertainty. I am tremendously excited to develop new programs for Financial Beginnings. I am also pondering other ideas to continually improve the efficiency and scope of the organization. You will have to come back to find out the details! 🙂
I will use this blog to inform you of new developments in Financial Beginnings, to present free available resources, and to offer new ideas and analyze existing ones.
My experience so far has been fun and productive. I welcome ideas, comments, and concerns. I look forwarding to hearing from you, thanks for reading to the bottom!
“If you can count your money, you don’t have a billion dollars.”
Josh
Tenants in foreclosure- The lease
Tenants in Foreclosure- The Lease
It has been a while since I’ve given an update on my situation. Quite honestly, I didn’t know that anyone was reading until last week when I was speaking to my friend, Nicole from Bank of America, and she told me she was dying to know what was going on. I was thrilled that someone was listening! I’m hoping others are too.
There is not much to update on my home. I am constantly in a state of feeling unsettled. We have begun to look for a home to purchase, but I think I’ll write about that in another post.
My landlord has been working with me after my strong response to his attempt to evict me from the home. I did offer to sign a six month lease with the landlord and continue to pay at the current rate that I have been. Why would I sign another lease when the home was still in foreclosure?
My lease coming up due put me in a hard situation. In July my landlord could have told me that he did not want to renew the lease and give me 30 days notice to move out. This would not have been in his best interest though because he would have a really hard time renting the home after I left. If her were to rent the home again he would legally be responsible for telling the new tenants that the home was in foreclosure.
The reason why I wanted to sign another lease was because it would allow for me to stay in the home longer if the home was sold due to the foreclosure. The new legislation provides for protection to tenants who are affected by a home sold due to foreclosure.
In Oregon, if you home is sold and you are a tenant here are the timelines you have to work with on moving out. The landlord or new owners have to provide you written notice that you need to move out:
• If you have a month to month rental agreement then you must be provided with a 90 day notice to move out.
• If you have a lease, then you are the best off because the new owner must allow you to stay in the home until the lease expires. The only way that you would not get the full lease time would be if the new owner intended to use the home as their primary residence. If that was the case then they would have to give you 90 day notice.
• If your lease is set to expire in less than 90 days, then the new owners still have to give you 90 days to move out.
So you can see that my having a lease is in my best interest to be able to stay in the home as long as possible. My concern with not having a lease was that I would have to move out of the home sooner. My existing lease did not default to a month to month contract once the lease expired so I without a lease or month to month contract I run the risk of having to leave sooner if the home is sold.
Even though my landlord told me on July 14 they would sign the 6 month lease I requested in my July letter they did not provide me with the new lease agreement until Aug 1. Since I felt that I had the upper hand here I requested some items in the lease that I would not have normally asked for including:
• There would be no security deposit on the home while it was in foreclosure. I agreed that if the home came out of foreclosure I would reinstate the security deposit within 30 days of notice.
• There would be no penalty for my terminating the lease prior to the end with 30 days notice. I felt this was important because due to the situation I am not forced to look for a home to purchase. If I find the perfect home before the lease is up I want to make sure that I can get out of the lease without penalty.
The landlord seems to have slowed in response, so as of right now I do not have a signed lease back from him. I’m not too concerned though because he has now accepted rents from me beyond the lease period which sets precedence for month to month contract.
Still, there is still a sale date set for August 23rd on the county steps. My next post will talk more about my gathering information from on the foreclosure.
Tenants in Foreclsoure- Threatened Eviction
Tenants in Foreclosure- Threatened Eviction
I utilized the form letter on http://foreclosurehelp.oregon.gov/DCBS/foreclosurehelp/docs/tenant_foreclosure_rights.pdf to draft a letter to my landlords letting them know that I would be applying my security deposit towards my July and half of the August rent. I sent the letter to them on the first of the month and within a couple of hours I had an email back from them saying that;
• The home was no longer in foreclosure
• The state and federal laws did not apply in this case
• Our agreement states that as long as we are in the home we need to pay rent
• That if we did not pay the rent by 9am on the 2nd they would send us a late notice and then if payment was not received within 7 days they would proceed with the eviction process
The landlord’s response was wrong on so many levels and I really didn’t know where to start so I just let it sit to see what they would do. Well, they did as they said and on the 2nd they sent a certified letter to my home saying that I was late and if I didn’t pay within 7 days they would expect my family to vacate the home.
Since the landlord was unlawful on so many different levels I really didn’t know where to start. I again spent the time calling their mortgage company, calling the trustee and even going to the county to verify the home was in fact still in foreclosure. The trustee and county have to provide the information because it is public record. The mortgage company on the other hand cannot tell you much unless they receive written authorization from the home owners. Still, if you keep your questions very general on the process they can usually give you some helpful information.
Everyone kept suggesting I retain an attorney to help, but I saw no reason why I should spend the money on an attorney to tell the landlords what I already knew. I really felt that I was so obviously right and they were so obviously wrong that this should be a battle I can manage on my own. Still, I did have some help from a friend who is a retired attorney to review my response before sending it off.
My response citing several laws landlord/tenant laws they were in violation. I started by research by turning to a book that I’ve used for year as a landlord titled Landlord/Tenant Rights in Oregon by Janay Ann Haas (http://www.amazon.com/Landlord-Tenant-Rights-Oregon-Janay/dp/1551804298/ref=sr_1_1?ie=UTF8&s=books&qid=1280164763&sr=8-1 ). This gave me a good place to start and then I dug deeper into the legislation http://www.leg.state.or.us/ors/090.html and it was very helpful, but rather cumbersome to find information in. My response:
• Again stated that I stood behind my July 1 letter and according to SB 952 and ORS 86.765 I am able to apply my security deposit towards the rent when the home is in foreclosure.
• Cited that our rental contract states that rent is not late until after 5pm on the fifth day of the month, so his demand for payment by 9am on the 2nd does not supersede that.
• ORS 90.385 prohibits a landlord from retaliating by servicing a notice to terminate tenancy or by bringing or threatening to bring action for possession after the tenant has performed or expressed intent to perform any other act for the purpose of asserting, protecting or invoking the protection of any right secured to tenants under any federal, state or local law. Under this we would be entitled to remedies provided under ORS 90.275.
• In addition to the wrongful notice mentioned ORS 90.394 and 90.155 and how they were not providing a proper nonpayment notice or following the correct timelines outlined in these statutes.
• I also let them know that according to our rental agreement we can seek for repayment of any attorney fees we incur in defending ourselves against their unlawful behavior.
The letter seemed to work because within a day or two I received an email from the landlords saying they were seeking legal council and would get back to us in a few days. A few days later they said they would continue renting month to month to us per the terms we had outlined in the letter.
A small victory. I still don’t know if and when the home will be sold for sure, possibly as soon as the end of August.
One thing I’ve been tackling with though is why have the landlords acted this way? I have been a model tenant and it seems they really do want to keep the home and continue to collect my rent payments. Are they are just desperate? Do they really not understand the situation they are in?
Tenants in Foreclosure- Security Deposit
Tenants in Foreclosure- Security Deposit
When I first found out the home I’m renting was in foreclosure my initial thought was to stop paying the rent. I felt that if the landlords were not going to pay the mortgage then why should I pay the rent? I felt betrayed by the homeowners and say now reason why they should financial benefit from the horribly position they put me in.
Well, after several emails and discussion from between me and the landlords it was decided that we would continue to pay the rent because I were contractually obligated to the landlords. The contract they had with the bank was separate. The landlords were fulfilling their end of the agreement and I needed to fulfill mine.
The sale date for the home is the end of August. It just so happens that my lease ends August 15th. The security deposit I put down on the home was equal to the July and half of Augusts rent. Even though I had agreed to fulfill our contract there was still the concern over the landlords paying back my security deposit. The landlords promised time and time again that they had the security deposit set aside, but all signs were pointing to them not.
After doing some research and found this great FAQ sheet on the on the Oregon Department of Consumer and Business Services website http://foreclosurehelp.oregon.gov/DCBS/foreclosurehelp/docs/tenant_foreclosure_rights.pdf
It confirmed that tenants who are in foreclosure can in fact use their last month’s rent or security deposit towards unpaid rents. The form states
“Can I apply by security deposit or last month’s rent towards this month’s rent now that I know my home is in foreclosure?
Yes. Starting in September 2009, you can apply any security deposit and/or prepaid rent towards your monthly rent payments once you become aware that your home is in foreclosure. You must notify the landlord in writing that you are going to do this. Attached to this flyer is sample letter #2 that you can send to your landlord when you pay the amount of your rent minus your security deposit and/or prepaid rent. Once the home is foreclosed upon, you are unlikely to get your security deposit and/or prepaid rent back from the old owner. You should apply this money to your rent as soon as you know that your home is facing foreclosure.”
So I utilized the sample letter supplied to inform the landlords of my intent to use the security deposit towards my July 1-April 15 rent. The response from the landlords is that they were going to evict me for nonpayment. I’ll cover this topic the next post.
Tenants in Foreclosure- The Signs
Looking back there were a few signs that the home I was renting was heading into foreclosure.
Last summer I was fully engulfed in the search for a home to rent. It’s very different looking for a home to rent as opposed to looking for one to purchase. When you are looking at a home to purchase you can see beyond the flaws because you know you can do the whole DIY thing and change it. Still, when you are looking to rent you do not want to rent a home that you are going to want spend money and time improving because it’s a waste of your funds to improve a home that you don’t own.
Accepting a lower rent amount
I finally found a really great newer home that would be perfect to live in. It was newer and the homeowners had good taste in decorating. The only problem was the rent was a few hundred dollars more than what I had budgeted. So I pitched my budgeted rent amount to the landlords and they accepted it! I don’t think that most tenants realize they can negotiate the terms of the lease. Tenants can offer a lower rent amount, lower deposits or different terms such as dividing the security deposit into a few payments. I’ve been a landlord for 6 years and have never had anyone ask if I would accept a lower rent amount. The worst thing a landlord can say is “no” so what’s it hurt to ask?
Still, looking back now at the landlords accepting $300 dollars less a month for rent I’m thinking it should have raised some red flags for me. There really was no negotiating on this. They just accepted it. I don’t know that they knew the home would end up going into foreclosure then, but I do think they were probably behind at the time and desperate for any funds they could get.
Someone taking photos of the home
A few months after moving in I noticed someone pull up to my home and snap some photos. This definitely raised flags for me! I have a friend who is contracted to do this type of work for banks. The two biggest reasons he goes to take photos are to check the progress on home under construction and to check on the condition of homes in foreclosure. Well, my home definitely was not under construction so my mind immediately went to foreclosure. When I contacted the homeowners about the person taking photos I was told they were looking into refinancing the home. Well I really should have known better. If they were refinancing the bank would want a full appraisal which would mean entry into the home and not just someone quickly driving by and snapping photos.
Some knocking on the door looking to deliver something to the owner
After a few months that someone taking photos turned into someone knocking on my door and looking for the owners. All he could tell me was the name of the company that contracted him. After several calls to that company with no return call I gave up.
The landlord visiting
Now this one is hard to be sure if it is tied or not. About a month before I was served with the foreclosure notice the landlord came to “check in”. She said she wanted to see if there were any repairs that needed to be done. I assumed she just wanted to scope out the house to make sure we were taking good care of it. While she was here she picked up some items that she had left behind. Was this because she knew she might lose the house? Did she want to take a look at the house to see if it was worth fighting to keep?
Tenants in Foreclosure- Do you keep paying rent?
After being a homeowner for almost a decade I found my circumstance last year putting me back into the role of tenant. I still fall into the role of landlord too, but the home I live in now I am a tenant.
In April of this year I received a certified letter informing me that the home I am renting is in foreclosure. My initial feeling was anger towards the owners, wondering what they have been doing with my rent. My next feeling was sadness because my plan was to slowly work through the process of finding a home to buy or better yet build one (or should I say have one built). Now I had to worry about where I and my family would be living in a few months. How would I explain to my 8 year old daughter why we have to move after living in this home for only a year?
My experience working in collections and my work educating youth in personal finance left me believing there would be no alternative but for the home to be sold in August. Still, we are in a strange market right now and the norm seems to changing constantly. The homeowners have assured me time and time again that they are working with the bank on a modification and the home will be brought out of foreclosure and oh yes…keep paying that rent!
After receiving the notice of foreclosure I saw no reason why I should pay them the rent. Still, after a conversation from the landlords and some research on my part I found that as long as they still own the home I still am obligated to pay the rent.
I just happened to find a great website for tenants in foreclosure http://foreclosurehelp.oregon.gov/DCBS/foreclosurehelp/information_for_renters.shtml because I was in a meeting where the Department of Consumer and Business Services was presenting on their resources for consumers. My worry is for those who don’t work in the industry as I do and do not have the resources or time to dedicate to the research the issue. How are they suppose to find the resources they need to help them through this process?
So what are your thoughts? Is it right that as a tenant you are still obligated to pay rent to a landlord who is not paying the mortgage?
My plan is to break this series into several posts as I work through this process. What I’ve come to find out is that this is really is a very confusing and emotional process for someone to have to go through. My hope is that my sharing what I’ve learned will help others faced with a similar situation.
In future posts I will discuss the signs leading up to this, the security deposit and others topics as they arise with my situation.
“Free” Credit Reports
Credit is probably the subject that sparks the most interest and questions from students of those that Financial Beginnings teaches. Students are intrigued by the possibilities of credit and also scared to death of it. With credit affecting so many parts of our lives now it’s no surprise that the students would be scared of it. Someone’s credit not only effects if they can get a loan, but it can also effect if they get a job or even how much they pay on their car insurance.
One of the biggest misconceptions students have is about the free credit reports. When I ask them where they go to get a copy of their free credit report they all break out in song singing “Freecreditreport.com”. They are so sad when I tell them that it in fact is not free. But man that jingle is catchy so you have to give credit to the marketing agency.
I then have to teach the students that the federally mandated free credit reporting site is www.annualcreditreport.com . Several years ago Congress passed the law requiring the three credit reporting agencies to provide consumers with a free copy of their credit report once a year to consumers. The unfortunate thing is that the credit score is not free and consumers have to pay extra for that. I usually recommend that consumers pull one of the three bureaus every four months (i.e. Trans Union in January, Experian in April and Equifax in August). This allows consumers to continually have a pulse on their credit. Obtaining the credit score really isn’t necessary unless you are getting ready to get a loan and want to find out before applying.
Consumers can also get a free copy of their credit report if they are denied credit. I always recommend that consumers do this because there may be a mistake on the report that caused them to be denied.
Credit Scores in the down economy
One of my favorite times of my week is Sunday morning when I get to lounge on the couch while my family spoils me. I get to sit on the couch and watch the cooking channel, while reading the paper and eating breakfast. I usually keep my laptop nearby so I can report any interesting articles I read to you all. Today’s Sunday Oregonian had several good articles in the Business section for me to write about this week.
Brent Hunsberger’s front page article “You are not our credit score” (http://blog.oregonlive.com/finance/2010/02/you_are_not_your_credit_score.html ) goes into detail on how the down economy has thrown a wrench the FICO credit scoring system. Most individuals were not able to avoid the downturn of the economy during the recent past. In the article quotes Fair Isaac Corp “Consumers with high FICO scores (we’re talking 760 to 789) are now more likely to default on their home loan than on their unsecured credit card debt.” Why?
With so many home owners finding themselves upside down on their home loans they are deciding that the best option is to just walk away and start over. A friend of mine was asking me for some advice last week because he has a rental home in Las Vegas that he purchased during the height of the market for close to $300,000 and he found out that a neighbor recently sold their home for $70,000. He’s one of the few that can actually make the payment he committed to in the loan, but he is scared because the rate lock expires this fall and the rate will begin to adjust. The finance company will not talk to him about refinancing or adjusting his loan unless he’s late on his payments. The only advice I could give him was to be persistent and continue to call the finance company until they are willing to work with him. I also suggested he find out what the laws in Nevada are for collecting the remaining balance on short sales in case he decided that he just has to sell it. In addition, he should stay on top of his mortgage payments to maintain a good financial standing. In times when payroll solutions redefining the way people manage their finances could offer valuable insights and support.
He asked me about some of the companies that market themselves as “consumer protection agencies” and say they will work with the finance company for you to get your mortgage adjusted. He said he called one and they said they would help for the “low rate” (please note my sarcasm here) of $3,000. There have been many companies that have preyed on consumers in several different ways marketing they can fix your credit or financial position. These companies even if they are legit in what they are doing do not do anything that the consumer couldn’t do themselves with little effort for free. Plus, these companies cannot guarantee results. So my advice….STAY AWAY! You money is better spent paying down your debt or better establishing your emergency fund.
Wow, this blog ended up going a totally different direction than I expected. I think I’ll stop for now and pick this up tomorrow. There is more I’d like to discuss relating to credit scores because I really haven’t even scratched the surface on this topic that I am very passionate about.
The History of Personal Finance Education in Oregon
I got a call today from a California Jump$tart board member who was doing a survey of the states to find out each state’s educational requirements in finance education. I was once again reminded of Oregon’s digression in their financial education requirements, while we are seeing other states progressing in this area.
So let’s start with some history. Until 1997 Oregon’s high school students were required to have one semester or ½ credit in personal finance in order to graduate. Since then personal finance has been required in the Oregon Academic Content Standards as a small section under the Economics requirements. Here is a link to the Oregon Academic Content Standards http://www.ode.state.or.us/teachlearn/real/documents/ss.pdf
In 1998 The National Council for Economic Education did a survey of the states to find out what requirements there were around finance education. In 1998 there was only one state that required a course in personal finance be taken. The most recent survey results from 2007 showed that seven schools now required a course. Here is a link to the report http://www.ncee.net/about/survey2007/NCEESurvey2007.pdf
In 2007 the Oregon Legislature realized the lack of financial education and assembled a legislative task force to “study and make recommendations about how to increase and improve civics and financial education in kindergarten through grade 12”. I served on this task force and the final report was produced and presented to the legislature in October 2008. Here is a link to the task force’s page http://www.ode.state.or.us/search/page/?id=1836.
In 2009, as a result of the report Senator Rick Metsger presented a house bill to bring back the ½ credit personal finance graduation requirement which did not make it out of committee.
So where do we go from here? Why is it that Oregon was one of the few states that had it right long ago, but dropped personal finance?
