How do I confirm rental property does not have a delinquent mortgage?

[mare_island_walkaway]

We have received the NOD for our property and are ready to start looking at prospective rental properties. Since we have 2 dogs, we are kick-starting this process earlier rather than later. Based on the advice so often given on this forum, I am concerned about renting a property that is or will become delinquent and subject to short sale or foreclosure.

With a property owner's name, I know I can check the County Recorder websites for any notices of delinquency, etc., however, a property owner could have stopped paying the mortgage well in advance of an NOD. Can anyone share advice on the best way to ask a landlord/property owner to demonstrate that any loans on the property are current? I would hate to move in to a new place and find myself back in the midst of someone's foreclosure process in a few months.

[rockbottom]

This is an excellent question and I had hoped to see an answer to it. We are going to be foreclosed on soon & will need to rent. I;m scared to death of having to move again because a property owner is/will be in foreclosure after we move in. I couldn't bear to go thru all this again.

[Evan Bedard]

With a property owner's name, I know I can check the County Recorder websites for any notices of delinquency, etc., however, a property owner could have stopped paying the mortgage well in advance of an NOD. Can anyone share advice on the best way to ask a landlord/property owner to demonstrate that any loans on the property are current? I would hate to move in to a new place and find myself back in the midst of someone's foreclosure process in a few months.

Like you stated you will be able to find out if the foreclosure process has officially started on a property. Once an NOD is filed it is generally gonna be at least 90+ days before a foreclosure date is scheduled and from there the "Protecting Tenants in Foreclosure Act" will give you a mandatory 90 days (in some instances until your lease expires) after the auction before you will be forced to leave the home. If you did happen to rent a home from a landlord who just stopped making their payments it could be a long time before you as the tenant will need to vacate the property. I would assume most landlords aren't too comfortable sharing this information if they truly aren't making the monthly payments on the home..

[walkin]

This might not be a guaranteed method, but you might check zillow to see if there was any recent sale or short sale attempts on the property. If there was a recent listing that was removed, it might be a red flag. Some people try a short sale before committing down the fc road. Either way, like Evan said, if there is no evidence of pending lawsuits on the county websites, you are probably good for a while, depending on what state you are in.

[despritfreya]

In addition to Evan’s comments. . .

The issue you raise is important and I have many clients worried about what will happen. Here is what I suggest to them:

1. If at all possible, get a copy of a current billing statement from the mortgage lender(s). Not sure how willing a potential landlord will be with giving this information to you, but it never hurts to ask.

2. While you may have some protections under the Protecting Tenants in Foreclosure Act, the ultimate goal is not to have to deal with it. You want to try to make sure your rent payments are properly allocated so that the underlying mortgage is paid. The possible solution is to have an escrow set up through a title company. You make the payment to the title company and the title company pays the mortgage on behalf of your landlord.

If the rent you pay is not greater than the mortgage payment, you increase the rent by $1.00 over the monthly mortgage amount. The title company sends the extra $1 to the landlord so that the landlord knows you paid the rent.

If your rent is in excess of the mortgage, there is no problem. Title company pays the mortgage and the balance goes to the landlord.

By funneling payments through a title company the landlord knows you made the payment and you know he/she did not pocket the funds, leaving you potentially out in the cold. A title company will charge a small fee for this service. You offer to pay it - how can the landlord say "no"?

Lastly, some landlords have "management companies" handle the rent payments. I do not recommend the use of a management company in place of a title company. Many landlords set up their own management companies, so you simply would be making a payment to the landlord without realizing it - with no way of knowing if the underlying mortgage was being serviced.

Hope these ideas help in some way.

Des.

[despritfreya]

I woke up this moring to find Walkin's comments in my inbox but for some reason, they are not posted here. In response to his/hers well though out verbiage - only one sentence quoted below. . .

. . . I find it unlikely that many people would be able to find a landlord willing to jump through that many hoops for a tenant. . .

And therein lies the rub. In the old days - when rentals were a dime a dozen and the foreclosure rate was on the rise - the escrow system worked. Today, yes, the market being what it is - the suggestion is a problem.

Walkin - if you read this - I do not know why your post is not here. Maybe you deleted it. I will hold it in my email for a few days just in case you want it re-posted?????

Des.

[walkin]

Lol, I think I may have had some technical difficulties or something. Can't remember all what I said, but something along the lines that I agreed your method would be a bulletproof protection for tenants...:- )

[despritfreya]

Lol, I think I may have had some technical difficulties or something. . .

I can cut and paste it if you want it posted. Had some good comments. Just say the word.

Des.

[walkin]

Hi Des. I think my issues have been sorted out, but I can't seem to find my post. If you still have it, I think it will be fine if you repost it. Thanks!

I can cut and paste it if you want it posted. Had some good comments. Just say the word.

Des.

[despritfreya]

Hi Des. . . I can't seem to find my post. If you still have it, I think it will be fine if you repost it. Thanks!

Your wish is my command. . .

Des.

Despritfreya seems to have offered a bulletproof method of guaranteeing that your rent
payment will be applied to the mortgage.

However, I find it unlikely that many people would be able to find a landlord willing to
jump through that many hoops for a tenant. It seems to me that we are in a landlord's
market, not a tenants market. In these times, if you have the right house at the right
price, you can advertise on Craigslist and have a tenant within 7 days, who will not
inquire about your finances. If I was a landlord and a prospective tenant asked me any
questions about my finances or my mortgage situation, I would politely decline to discuss
the matters and tell them to beat it, because to me, the red flag goes up
"nit-picking tenant alert!". I would laugh at a tenant who requested that
they/I set up some kind of title escrow. As a landlord, I would think that it is my
personal business how, if, and when I pay any mortgages associated with the property.
Also, if I let a tenant know how low or high my mortgage payment might be, it might cause
other issues, i.e. "well, since he is clearing $xxx profit every month, maybe we
should bug him to fix this, improve that, etc.". Just my couple pennies.!