Apparently, even if you make your payments on time and in full every month, you’re still in danger of getting thrown out of your residence. Sandra Pearson almost learned this lesson the hard way. She was featured in a story on CNN Money’s website on Thursday, because she was nearly thrown out of her rented home in Santa Maria, California after her landlord stopped making his mortgage payments and had his lender foreclose on the property.

Even though Pearson made her payments on time and in full every month, and her lease was through June 2010, in October 2009 she received a notice to vacate from the lender, and now landlord, First Franklin Bank.

Citing the Protecting Tenants at Foreclosure Act, an act signed by congress last May stating that as long as a tenant pays rent on time, the lender has to honor the remainder of the lease, Pearson was able to stay in her home. In December, First Franklin crumbled and OneWest Bank took over as her new landlord, and once again tried to muscle her out of the home.

And this is far from an isolated incident. In doing some more research on this subject, it seems that this is becoming a relatively common practice. Thousands, if not millions, of people bought homes during the boom years with the intent of  renting the homes out while waiting for property values to skyrocket, and were planning on selling for huge profits once they did. When things took a turn for the worse, many of these investors simply decided to default on the mortgage and let the lenders foreclose.

And despite the Protecting Tenants at Foreclosure Act, there have been thousands of reports of lenders, and agents representing them – usually law firms or realtors – trying to strong arm tenants of foreclosed homes out even though they have honored their end of the lease terms.

The fact that lenders are trying to use scare tactics isn’t all that surprising, or even newsworthy. Anyone who’s ever missed a mortgage payment or tried to get a loan modification from their lender knows that pretty much all lenders use scare tactics to get what they want. What seems most interesting about this story is this: Why, in a real estate market where defaults are running rampant and prices are supposedly on the rise, would these lenders be so quick to force out a reliable tenant and give up the steady income while property values increase and they can then sell the home for more money?

The only logical conclusion one can reasonably come to, is that despite many reports by those in the mortgage and real estate industry that the worst is over and things are on the mend, perhaps those who are the most informed know something that they’re not telling us – namely that the worst is not behind us, and we’re in for another wave of foreclosures and dip in home values?

There is definitely recent information that supports this theory. Recent reports by both Moody’s and Standard & Poors expect a huge wave of new foreclosures in the coming months, citing the failure of the governments Making Home Affordable program, the unwillingness of many banks to modify home loans, and the general weakness that’s still prevalent in the economy.

Is there any other reason why banks would be trying to defy orders from the federal government just to throw away a stable monthly payment, other than to try and dump these homes on unsuspecting home buyers before things get any worse? If there is, they certainly aren’t telling us.

Jon Maddux


Jon D. Maddux is the former CEO of Although there has been a bit of controversy with the company name, the entrepreneur passionately believed that homeowners across America would desperately need foreclosure advice and so he came up with the Walk Away foreclosure help website. Having over 11 years of real estate and finance experience, Maddux realized with the burgeoning credit crisis, many homeowners in adjustable rate mortgages and high LTV loans were unaware of what they were about to face. With that understanding, Maddux developed an affordable business model that allowed homeowners to know their rights and use the law to their advantage. Beyond the monthly foreclosure monitoring service and cease and desist letters, You Walk Away provides attorney consultation in each state and CPA consultations. Homeowners are armed with the knowledge and peace of mind they need to go through possibly the toughest experience of their lives.

Since January 2008, You Walk Away, LLC has helped over 8000 customers navigate through the hardship of foreclosure and / or a short sale. You Walk Away has been featured in news publications and TV programs such as: ABC Nightline, CNN,Yahoo Finance, Time Magazine, The Wall Street Journal, front page of The New York Times, Bloomberg, Forbes, Fortune,Money Magazine, NPR, AP, NBC, CBS and Fox News among many others. Many of these publications have used quotes from Maddux about foreclosure, short sales and mortgages as well as obtaining a mortgage after foreclosure or short sale.

More recently Jon has launched, a free website that helps people find out if they are eligible for a new mortgage after foreclosure or short sale. There are free resources available on the site to help consumers get back into homeownership. At and now, Maddux writes about foreclosure, short sales and getting new financing after foreclosure or short sale. Jon specializes in hard to get Jumbo mortgages after foreclosure and short sale. As you can imagine, with helping thousands of customers go through this process, there is special insight and first-hand knowledge that he gets and is able to share with his readers. Jon Maddux is a licensed mortgage professional focusing on helping people that have gone through foreclosure or short sale buy again with better market timing.