Investment prop walk away...dealing with tenants?

[nogero1]

Hi all! Just found this website this week and it's been a Godsend. Wonderful information and peace of mind knowing that thousands (millions?) are going though the same stress and heartache and have the same fears and questions and relief in all of the wonderful advice found here!
I have 4 rentals, purchased as non-owner occupied investment properties. Purchased in 2007 in Oregon. 80/10/10 loans, no PMI, Payment Option ARMs adjusting May 2010. Purchase money 1st and 2nd, appear to be non-recourse loans. Lenders not willing to negotiate with me since I'm current on the loans to date.
They are all badly underwater and I'm considering all my options at this point including walking away in order to get the attention of the lenders for a mod in order to keep them with better terms or, if that fails, to really walk away.
Two questions.....
1. How should I deal with still receiving rents while I'm in default? Does anyone have experience with whether there is additional liability on my part if I receive payments while not paying on the mortages. My loan docs include a "1-4 Family Rider". Anybody familiar with this addendum?
Since the loans are non-recourse, what can the lender do regarding the tenant revenue I receive?
2. Are the tenants occupying the properties going to have people from the lenders harrassing them either by phone, mail, or by posting notices or banging on the front door? I have current leases in place with the tenants through May 2010. I want to know what the tenants may expect while I work out my situation with my lenders.

Thanks for all your help!!!

[nogero1]

To any attorneys...I started this thread on the deed-in-lieu forum first and was directed to post here. The responses on that other thread have prompted another question. One that is probably best asked here where the legal experts can weigh in.

In Oregon (like California) I believe that whether a mortgage secured by a deed of trust with power of sale is deemed "recourse" or "non-recourse" has nothing to do with whether the home was purchased as a primary residence or as a rental, investment, vacation home, etc..
I believe that the delineation is based on whether the lender proceeds with foreclosure using non-judicial means (eg. Deed of Trust w/Power of sale), which seems like they are doing in almost every case since their are issues such as redemption rights and massive costs and risks for them to go through with a judicial foreclosure.
Oregon anti-deficiency law is identical to California's, so if someone in California knows the answer too that would be greatly appreciated!
It would be fantastic if someone on here can confirm or refute my hypothesis!!

Thanks

[vegasunderwater]

I am new and an investor, just signed on yesterday. You need move this to:
Real Estate Investor Forum - Loan Modification Forum - LoanSafe.org

Many of us are in the same exact position. You need to be aggressive and get good legal advice.

What a lot of smart investors here in Las Vegas have done (after getting nowhere with loan mods) is hire an attorney and stall the process out while collecting the rental income. It's the only way to recover some of your loss. They made sure assets and income are protected ahead of time.

[jakelabry]

Originally Posted by nogero1

Hi all! Just found this website this week and it's been a Godsend. Wonderful information and peace of mind knowing that thousands (millions?) are going though the same stress and heartache and have the same fears and questions and relief in all of the wonderful advice found here!
I have 4 rentals, purchased as non-owner occupied investment properties. Purchased in 2007 in Oregon. 80/10/10 loans, no PMI, Payment Option ARMs adjusting May 2010. Purchase money 1st and 2nd, appear to be non-recourse loans. Lenders not willing to negotiate with me since I'm current on the loans to date.
They are all badly underwater and I'm considering all my options at this point including walking away in order to get the attention of the lenders for a mod in order to keep them with better terms or, if that fails, to really walk away.
Two questions.....
1. How should I deal with still receiving rents while I'm in default? Does anyone have experience with whether there is additional liability on my part if I receive payments while not paying on the mortages. My loan docs include a "1-4 Family Rider". Anybody familiar with this addendum?
Since the loans are non-recourse, what can the lender do regarding the tenant revenue I receive?
2. Are the tenants occupying the properties going to have people from the lenders harrassing them either by phone, mail, or by posting notices or banging on the front door? I have current leases in place with the tenants through May 2010. I want to know what the tenants may expect while I work out my situation with my lenders.

Thanks for all your help!!!

1. Not really sure how to answer this, but there has been legislation passed recently protecting tenants whose landlords are in foreclosure. I would suspect the rent you are collecting might not be in danger from the bank, but from the tenants. I believe they can stop paying or pay it into an escrow account that you can't touch. You may want to check with a lawyer.
2. Yes. That's how the tenants will find out you are in foreclosure.

[classicgk]

I have two condos that are in the process of having sheriff's sales. The one condo had a sheriff's sale and now goes through a six month period of redemption. From what I understand the tenant has either two or three months after the six month period of redemption expires before he has to move out. This is the new federal law.

I told the tenant at what point he can expect to have to possibly move. Yes, he does have to pay rent and can be evicted. Since this was Minnesota his main concern was having to move in the winter. Yes, the sherriff did come around and serve the tenant papers who then gave them to me.

Communication is important with your tenant. Let them know when the time comes what the respective time frames are.

[classicgk]

My mortgages too have the rider where you will supposedly pass on the rents. Just remember that the bank has to get it from you though!

My attorney told me 95% of the foreclosures in Minnesota were by advertisement and nonjudicial; in otherwords they were just taking the property back and not coming after me personally.