For individual homeowners, the foreclosure process can be jarring and traumatic. Once the bank seizes an owner-occupied property and puts it up for auction, its owner must move out and find another place to live. In most cases, this is extremely disruptive for everyone who lives in the house.
For renters, the foreclosure process can be even more emotionally draining. Unfortunately, landlords are under no legal obligation to inform their tenants of the status of their property's mortgage. In some cases, tenants are unaware that their landlord has stopped paying his or her mortgage until the foreclosure process has already begun. These unfortunate tenants might come home one day to find an eviction or foreclosure notice taped to their door. Meanwhile, their landlord may have fled the area or chosen to stop responding to contact attempts.
If you find yourself in this situation, you may be furious with your landlord. Unfortunately, landlords who subject their tenants to such abuse may not be in violation of the law. Although a landlord is morally and contractually obligated to continue making payments on his or her mortgage, he or she may not face criminal penalties for not doing so. After all, the foreclosure process constitutes a fairly severe punishment: Landlords whose properties fall into foreclosure stand to lose a significant source of income.
Worse, landlords who find themselves in this situation may suffer a dramatic hit to their credit scores. Such a financial wound may take years to repair. During that period, it may be difficult or impossible for the affected landlord to secure another mortgage. In other words, landlords who find themselves in foreclosure may be in a heap of financial trouble.
Nevertheless, you'd probably prefer to avoid such a situation altogether. If you suspect that your landlord has fallen behind on his or her mortgage, you have every right to inquire directly about his or her financial health. If you don't receive a satisfactory answer, you'll need to take matters into your own hands.
First, check with the tax clerk who oversees the collection of property taxes in your city or county. If your landlord has failed to pay his or her property taxes, he or she may also be delinquent on the mortgage. Since property-tax records reside in the public domain, you'll be able to obtain this information without difficulty. Likewise, get in the habit of opening every piece of mail that comes to your house. If your landlord is behind on his or her mortgage, there will be an official paper trail.