Dawn, Home Buyer in 06901

Can a house be rented out when it is foreclosed and under the bank's ownership?

Asked by Dawn, 06901 Sun Jul 31, 2011

The house I am referring to was being rented out to a family while the home was listed as foreclosed and belonging to the bank. The family was paying rent to the former landlord and claimed they did not know the home was under foreclosure. This circumstance ocurred with full knowledge of the realtor rep who was responsible for selling the property. If the realtor arranged for this family to move into a home that should have been offered to outside bidders first, is this a case of indirect discrimination? Are the actions of the realty rep unethical? The Department of Health was called by a family member and the family no longer lives there.

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6
Renee Burrows, Agent, Las Vegas, NV
Mon Aug 1, 2011
I am in the Las Vegas market and it DOES happen here. It is rare but it happens.
0 votes
Barry Shapiro, Agent, Camarillo, CA
Sun Jul 31, 2011
After foreclosure the bank or an investor owns it -- so renting from the bank would not be possible.
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0 votes
Keith Cuddeb…, Agent, Pleasanton, CA
Sun Jul 31, 2011
That will be between the bank and the former owner to work out. Sounds like the former owner might owe the bank some rent they mistakingly collected. Meanwhile, those tenants should pay rent to whomever the bank directs them to. However, the bank is going to want to sell this foreclosure home as soon as possible so they will want to see the rental agreement the tenants have and then negotiate with them to vacate the house.
0 votes
Sameer Punja…, Agent, Vallejo, CA
Sun Jul 31, 2011
It could be the owner didn't know the home got foreclosed. I mean, they get so many notices from the bank, and don't have a clue when the property actually sells. But a lot of landlords are collecting and playing dumb.

What I'm seeing now is in the markets that are depressed, Fannie and Freddie are trying to rent them out instead of unloading them because then they don't want the loss to hit their books.
0 votes
Michael Emery, , Minneapolis, MN
Sun Jul 31, 2011
If the home was in the legal possession of the bank, then the former owner would not legally be allowed to collect rent.

Typically what happens when the property reverts to the bank is the asset manager is notified if there are tenants and then an effort is made to move them from the property. Then the locks are changed, the house is cleaned (trashed out) and the house is put up for sale. Banks rarely will rent out bank owned homes due to the liability issues and the need to secure the property.
0 votes
Gerard Carney, Agent, Spring Hill, FL
Sun Jul 31, 2011
Foreclosure means the bank owns it, so no it is not likely since the bank is not in the property management business
0 votes
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