Home Loans and Support

Less likely to foreclose if I rent out the house?

Discussion in 'Stop Foreclosure and Tell Us Your Story' started by SlicedBread, Sep 30, 2010.

  1. SlicedBread

    SlicedBread LoanSafe Member

    Hi everyone, I have been trying to sell my house before it gets foreclosed on. I am about 5 months late on mortgages.

    The house is empty and free of tenants. In this town, that fact makes the house much more sellable.

    However, the house needs a lot of minor repairs, and it's not selling for that reason. I have been thinking of giving up on selling it, and renting it again for the income. The lost rents have been bleeding me dry.

    So say I rent it again. My understanding, if the bank then forecloses, it would inherit the headache of either being the new landlord to my tenants, or of evicting them. So maybe they'd be reluctant to foreclose. On the other hand, maybe the bank would figure that I am less interested in keeping the house, that it's not my primary home, and therefore pounce to foreclose.

    So I worry about what the bank will do if it learns the place is rented. What do people think? In their great wisdom, are banks more likely, or less likely, to foreclose on a home that is rented out to tenants?

    Thanks for the community and the forum. Very grateful for any thoughts.
  2. DBarr13447

    DBarr13447 LoanSafe Member

    We have a vacant house (due to relocation) which we wanted to rent, but the difference between rent $1500 and our payment $3500 on a house already underwater by $200,000+ made the decision to try to short sell.

    There are MANY people in our area who have moved out, quit paying & renting out their houses (telling tennants the situation) and keeping the rental income while waiting for foreclosure. Depending on your state, the tennants get fair notice to move out (30-60 days) upon foreclosure. If there is a signed rental agreement, that goes with the house and it becomes an issue for the bank.

    We didn't choose this route for our own reasons.

    However, I'm hearing about situations where the bank finds out about the rental situation and might pursue some of that rental income collected while not making house payments. Is that true? I don't honestly know....better check it out and be sure before you decide.

    Good Luck!

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