I’m in college, and I live in a rental house. There’s no formal lease, and my landlord never asked for a deposit of any kind. Last January, I started receiving notices from Chase Mortgage saying that my landlord is $7,500 behind in his mortgage. I’m worried about what will happen if they foreclose on him. Should I move out, stop paying rent, or what? He’s told me not to worry, because he’s just behind on the payments and not in default.
Well, the last part is not quite true. When you’re behind on payments you are, by definition, in default.
Still, I think you should stay right where you are for now, and keep paying your rent on time like normal. Keep the lines of communication open with your landlord, too. I’d also contact Chase, and tell them about your situation in this house. Ask them to keep you informed about what’s happening with the property, so that you’ll have time to formulate a plan and find a new place to live if the house goes into foreclosure.
Chances are they’ll give you at least 30 days to move out if a foreclosure occurs. You probably won’t have to pay anything to the bank afterward, so you may get to sit there rent-free even longer while they sort out everything. Considering the fact that you don’t have money wrapped up in a deposit or a lease hanging over your head, there’s really not a lot of risk for you here. Your landlord is still providing the home, and the truth is that foreclosures, if it comes to that, generally take a while to complete.
You might keep an eye out for other properties in the weeks ahead, but other than that, as a renter, you’re still in pretty good shape.
* For more financial help please visit daveramsey.com.