San Diego Housing Market News and Analysis
House I am renting is about to go into pre-foreclosure - what to do?
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Submitted by FormerOwner on July 8, 2007 - 6:26pm
Well, my landlord wanted to have a talk with my wife and I today. We had a feeling what it was about: The house we are renting is a good 100K underwater, the landlord is in a negative cash flow each month, and he has a neg-am loan. Doesn't get much worse than that. Oh, and he's a realtor. He offered to sell it to us for what he bought it for but I wasn't receptive to that (obviously!). He then stated that he was going to stop throwing good money after bad and just walk away. He's been talking to the bank about doing a short sale but they're not receptive to it. He's going to make a decision on what to do by the time the next mortgage payment is due in August. Unless either we buy the house or the bank lets him do a short sale, he's going to walk.
I want to be able to use him as a reference for another rental and I don't want to screw him over (he's a nice guy and he's been very up-front) BUT he's got my 2K security deposit and this is going to force us to move and incur some moving expenses, hassle, etc. It may actually work out OK because I am considering relocating anyway.
My question is this: What about if I tell him I'll keep paying the rent until he get's an NOD then just stop paying and find myself a new rental house with the lease starting 90 days after the NOD (so I'm gone before the auction date)? I'd tell him to keep the security deposit so he'd get some compensation for the last 90 days I live in the house, just a lot less than normal. Am still legally required to pay rent even after the house is in pre-foreclosure? What would you do?
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