The landlord not paying the mortgage is a breach of their contract (mortgage) between the landlord and bank. The tenant is not a party to that contract.
Yes it sucks for the tenant if their landlord stops making payments. But isn’t withholding rent doing the same bad thing as the landlord… not paying ones agreed obligations?
Just my 2 cents.[/quote]
You are correct.
BUT when the landlord breached the mortgage contract, the bank can seek relief (foreclose then evict).
But the tenant is also free the breach the rental contract. And the landlord can seek relief (evict).
Pragmatically, either/both of the above will result in eviction, so there is no additional risk in the tenant breaching the rental agreement.
If the bank doesn’t have the resources to foreclose immediately then the landlord still owns the house.
If the landlord (who has already exhausted his resources) cannot or doesn’t bother to start an unlawful detainer action, then the tenant can remain until such time the bank negotiates cash-for-keys.
As with any suit/eviction, the tenant can respond in court and tell the judge the reason for the breach. If the judge orders payment, then the tenant can pay up and remain. In these times, it likely the judge will be sympathetic. The worse case is the judge will order the tenant to pay up, so the tenant is back to square one.
It’s costly for the landlord to hire a lawyer and start eviction. Most accidental landlords would not even know where to begin. If they defaulted on their mortgage already, they have already written off the house as water under the bridge.
It’s not a question of morals.
It’s a question of pragmatism and doing what is legal and best for one’s own interest.
If you’ve been following the financial crisis and still don’t understand that, then that’s your own fault.
