Increasingly, renters nationwide are getting caught up in the foreclosure shuffle. Rental properties, often purchased by speculators during the boom, now comprise 38% of foreclosures. And "in most states, foreclosure itself automatically terminates a tenancy," says housing attorney Judith Liben. In many cases, renters are also losing their security and pet deposits and other upfront expenses.
In Ohio, for instance, "the basic rule is ... if a home is foreclosed on, the lease is no longer good," says Scott Torguson of Southeast Ohio Legal Services. "When they have to be out depends on the bank."
Most banks haven't the slightest desire to become landlords and require renters to vacate with a few weeks' notice. A best-case scenario is a "cash for keys" incentive program that pays the renter off to move out quickly. For many renters, however, the upshot is a notice from the bank that the rent is now some outrageous amount, a thinly-veiled invitation to leave with great alacrity.
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