I'm currently renting a home on a month to month verbal agreement that is now an REO. What are my rights?

Asked by Confused, 48084 Mon Sep 8, 2008

I was supposed to be helping a friends friend keep their home by moving in and paying rent so they could keep the home. Apparently they were just pocketing the money. I moved in mid-Dec and the home went up for sale on July 8th due to default. From my research it's currently listed online for sale as an REO. So now, the lender owns it and not my landlords. I understand there's a 6 months redemption period and I have until the end of that time to move out unless otherwise indicated by an eviction notice, but can my "landlords" collect/demand rent legally when the home isn't even theirs? Should I contact the lender and offer them the rent to stay longer? Should I wait and talk to the lenders real estate agent when the process get's to that point? I'm not in a position to move yet and would like to stay in the home as long as possible without getting taken for my money.

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Confused, , 48084
Fri Mar 20, 2009
Well, here it is months later and this is how it all panned out... The home went up for sale on July 8th at the local sheriffs auction. As in most cases the lender ended up buying it back. I did pay my landlords through to the end of the 6 month redemption period that ended on Jan 8th. About a week later I got a notice taped to my window about needing to call about the housing forclosure situation. I called and it was a representative for Fanny Mae(who now owns the home). At this time Fanny Mae was trying to get together a program that would give current residents the option of doing the "Cash for Keys" program or a new rental program. While they were getting the details down they put a freeze on evictions for the months of Jan and Feb. As the details were finalized I opted for the "Cash for Keys" and set a move out date for March 15th which later got extended to April 1st by the Fanny Mae Rep with my approval. During this time there is no rent due.
The rental Option allows the current resident to stay in the home on a month to month basis until it is sold. There is no credit check or application for this. During this time the home will be up for sale, sign in the yard and all, and residents will have keep the home up and allow agents to show the home. The rent would be based on the "Current MKT Rate for the area". I opted for the cash for keys. This means we have agreed on a move-out date and I will leave the home in "Broom Condition". Basically meaning that I will remove all of my belongings, leave what belongs(ie: cabinets, carpet, sinks etc), do light housework and not trash the place. In exchange for this courtesy they will pay me cash. This is money I can put towards moving costs, security deposit or just keep in the bank. They offered me $871 and I took it. Not sure if it is negotiable or not, I didn't try.
I hope this helps anyone that finds themselves in a similar situation. It's a scary spot to be in but my Fanny Mae Rep has been very supportive and understanding. He checks in with me every week to make sure everything is ok and moving smoothly.
1 vote
Reema Sharma, Agent, Glen Oaks, NY
Wed Mar 7, 2012
thanks for the update. it was helpful.
0 votes
Derek Bauer, Agent, South Lyon, MI
Mon Mar 23, 2009
This is great information ... thank you!
0 votes
smith3gary, Agent, White Lake, MI
Sat Mar 21, 2009
Confused,

Thank you very much for the update. We get several questions like this every month, but little feedback. With the governments new Making Home Affordable website, we can try to get homesellers to see if Fannie Mae owns their loan and perhaps save a few people some grief.

Good luck in your move..
Web Reference:  http://mi-living.com
0 votes
Scott Godzyk, Agent, Manchester, NH
Tue Sep 9, 2008
I wouldnt pay any more rent to the former owner, and as far as paying rent to a lender it is not an accepted practice. a lender will not collect money/rent form tenants. they will seek eviction as per your state law. Your best bet is to ask for a cash for keys agreement where you will give them a date you will be out and then when you leave and the place is free of debris/furniture they will pay you usually $500 to $1500 and sometomes higher. You will ultimately have to move, so to limit the emotional crush you should start looking now and try to negotiate, you wont be able to fight the eviction. good luck
Web Reference:  http://www.ScottSellsNH.com
0 votes
smith3gary, Agent, White Lake, MI
Tue Sep 9, 2008
Confused,

From your response, it would appear that you are in the redemption period, which is described in the links on the MSHDA website. When you contact an attorney, they will need to know that information.

I know this is very frustrating. When you start looking for a new place, there are homes available on http://moveinmichigan.com simply enter 1 or 2 (thousand) for your maximum price. This is not my personal website, but the public site for my Multiple Listing Service. These homes are offered by home sellers through real estate companies.
0 votes
Confused, , 48084
Mon Sep 8, 2008
The owners had it up for "sale by owner" when I moved in. We had showings and everything with no luck on finding a buyer. We have no written contract. I was to live here month to month until the home was sold to help them pay the mortgage. Then a storm came through and high winds blew the sign down. They took it and never put it back up. They also stopped mowing the lawn. This is when I started to get worried. A couple weeks later I came home to find the forclosure notice on my porch. It states the home is now in forclosure and defaulted back to the lender and is going up for sale at the court house on July 8th. It states boldly that this is not a move out date. If the home is vacant then you have 30 days to get any personal items out. If occupied, then you have 6 months to move out. i know the owners have absolutely no intention on getting the home back.
0 votes
smith3gary, Agent, White Lake, MI
Mon Sep 8, 2008
Confused,

By up for sale, do you mean there is a real estate sign currently in the yard, or the sheriff auction was on July 8th? This is important because of the redemption period and eviction process.

I would agree with two things. an attorney will be able to discuss your choices and who you should pay rent. I suggest looking at the links on the website Ed and Cindy suggest from MSHDA. There is information on that site about foreclosure and possible timelines. There is also rental assistance information.

Another site that may help is http://www.michigan.gov/documents/Landlord__Tenant_Guide_10-…
Web Reference:  http://mi-living.com
0 votes
Derek Bauer, Agent, South Lyon, MI
Mon Sep 8, 2008
Some of these answers reflect why we as realtors are not allowed to give legal advice, and must encourage you to seek legal advice from an attorney. So, I am doing that. In addition...

Yes, as twisted as it sounds, I have learned that the landlords can in-fact still require the rent money for the length of the contract. If you don't pay, it would be up to a judge to decide most likely. Contact an attorney immediately! I have heard a lot of creative solutions to this all to common problem...

Good luck!
Web Reference:  http://www.DoorToDreams.com
0 votes
Ed & Cindy K…, Agent, Shelby Township, MI
Mon Sep 8, 2008
Hi Confused I agree with Chris start looking for another place. Again not an attorney but check below this is a great site that explains the actual foreclosure process in Michigan. But I would also find out when the actual sheriff sale occured so you do not get evicted. Check with the county where the home is located and see what the move out date is. Do not look online. You might also want to see what your friends intentions are. They may be trying to work something out with the bank. For instance if the home is for sale they still could do a short sale with their bank. Of course this would still be bad news for you if they sell it . Until that redemption is over you would be working with the owner.

As agents we need an authorization signed by the sell/owner to even talk to the bank, so I doubt they will talk to you. Then once the banks are thru the redemption period, they get the homes emptied of personal belongings and on the market for sale for a quick sale.
0 votes
Chris Klebba, , Charlotte, NC
Mon Sep 8, 2008
I'm not an attorney, neither are any of the others that have answered, I don't think. I am told this...YES, the "owner" can still collect the rent from you during the redemption period if you have a contract with them. Sounds backwards, unethical, etc., but I'm told by an attorney that they can still enforce their contract with you. Start packing!
0 votes
Jonathan Tay…, , Orange County, CA
Mon Sep 8, 2008
Consult an Attorney 1st. The "landlords" can not charge rent on a home they don't own (unless they were managing it for the Bank...an unlikely scenario) The lender will probably kick you out even though it's smarter to let you pay them rent...liability issues are what is in play here. Start looking for a lease imediately I'll send you some if you tell me price area etc. Don't pay your "Landlords" scam artists anymore money. Be prepared to move...it's not that bad. It will all work out. All good things to you.
0 votes
Dallas Texas, Agent, Dallas, TN
Mon Sep 8, 2008
You need to start taking action and searching for another location. Most lenders DO NOT WANT tenant in their property.
http://www.lynn911.com http://www.homes-for-sale-dallas.com
Web Reference:  http://www.lynn911.com
0 votes
Jonathan Tay…, , Orange County, CA
Mon Sep 8, 2008
First of all contact an attorney. They can not demand rent (landlords) unless they own it. Contact the bank (attorney 1st) and see if they will want a renter while they fix up the place to sell. (may not work)
Good luck to you...it's apickle that you never asked for.
0 votes
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