Hi Piper,

Your question, "I am leasing a house, and just found out it is going up for auction as of July 1,2009. Though my lease is not up until September 2009. I have a family of five and small animals, I am scared and don't know what to do..."

Your lease is with a landlord who cannot provide you the property after an auction. But it is not unusual that auctions are delayed and this may give you some solace. Auctions often are postponed--and when that happens the bank has to republish the legal ads to alert the public about the property, so there will be a 3-4 weeks of delay if the auction is postponed. And it could be postponed more than once.

What could cause a postponement? Today it is possible for a landlord or any borrower to "modify" a mortgage. There are multiple modification possibilities. And your landlord may be in the process of this--which will certainly postpone his auction for up to 6 months and then eliminate it all together if he can stay current with his loan. Let's look at modifications:

First, and most advantageous to the bank is offering the borrower a period of breathing room--really a delay in payments for up to 6 months. This just gives the borrower a time-out, interest does accrue while no payments are made, but the interest is added to the principle and the six missed payments are added to the end of the loan.

Second and more advantageous to the borrower is a true modification of the RATE which will change the payment. Many loans have adjusted from an artificial low rate to a high adjustable rate. In this scenerio the rate is returned to a lower fixed rate. So the payment goes down. This is never suggested by the bank, but can be negotiated usually by a bankruptcy lawyer instead of the borrower claiming bankruptcy.

Third and even more advantageous to a borrower would be a lowering of the AMOUNT (principle) owed. Again, not too common, but in a situation where a property has lost a ton of value, the bank may consider taking the property in a foreclosure auction, but realize they may not be able to sell it for the money owed--so it may be more advantageous to all parties to keep the loan in place and the owner in the property, but change the amount owed, which again changes the payment.

Of course some NH landlords have a few bucks under the mattress and sometimes either pay off the bank just before the auction or declare bankruptcy--either of which will stop an auction.

I'm sorry for your delema, I would suggest you call the landlord to learn whether he plans to access any of the above ideas--or maybe he has others of his own--and he should level with you regarding what is happening. I am assuming you like the house you are in, and might even have stayed there past September--but either way there are other places for rent. Just be sure you stop paying rent until you learn what is happening, and especially if you have a security deposit with the landlord.

Hope this helps,

Dane Hahn
NH Broker
Betty LaBranche Real Estate
603-566-5460

Sorry to hear about your predicament. Were you hoping to renew your lease or were you planning on moving ( or possibly buying?). It is very scary not knowing what is happening, IF the auction happens on July 1st and IF there is a bid made and accepted, there is usually a time period of 45 days before the closing or transfer of title takes place. I am not sure how your lease may affect this. 1) I would talk to your current landlord and see if they are trying to work out any arrangements with the bank to stop the auction/foreclosure 2) I would try to contact the bank/mortgage holder and see if they would be willing to hold off on the auction until your lease is up or schedule it for later in July early Aug so that a successful buyer wouldn't take title until after your lease expires in Sept 3) contact a real estate lawyer for a free consultation regarding your rights as a lessor and 4) see if you can get pre-approved to buy a property ( if you are interested in homeownership at this time) or finding another property to lease ( honestly with a family of five and pets you are probably limited to the number of rentals that allow pets and are large enough for your family,and may find that overall it would be cheaper for you to buy a home....I wish you luck and if I can be of further interest or if you would like some reputable mortgage broker orreal estate lawyer contact information please let me know. Also, if you would like me to help you find another rental just say the word. I hope this helps.....

Carla Bailey
Century 21 Bridge Realty
Carla.Bailey@Century21.com

Have you tried to get pre-approved to buy a home? It's a great time to buy due to the bank owned inventory we have out there. Once you own, you won't have to worry about this happening again to you as long as you make your payments.
This year the government is giving an $8000 tax credit to 1st time homebuyers. This is up to $8000 directly into your pocket just for buying a home. There are also many 1st time homebuyer programs available to help you qualify. Please give me a call if you are interested in more information or to get pre-approved. We're located in Dover, NH.

Thanks,

Wayne Laverdiere
Envoy Mortgage
383 Central Ave, Suite LL35
Dover, NH 03820
(603)749-5626