Renters beware - or prepare. How many renters out there have been forced out of their home, often not long after moving in, because the home gets foreclosed on? I'm hearing a lot of these stories. The paper had an article on it today. What surprises me still, is that 3 years into this mess, everyone is so surprised and shocked when it happens. The terms "deer in the headlights", "sheep to the slaughter," and "hapless victim" reverberate in my mind. I don't mean to be uncompassionate, but rather to spur you on to action. Take charge. You are the captain! You are in the driver's seat!

One small step step down from my soap box, one giant step for tenants everywhere... Forewarned is an opportunity to get forearmed -- but it is not automatic. So what can you do so it doesn't happen to you? Here are some steps you can take to minimize the risk of foreclosure knocking on your door.

Warning: If you read on, you will be without excuse.

BEFORE YOU RENT

1. Ask the landlord if all loans and liens are current.

Though some will lie, there are those who will tell you. Foreclosures can be initiated for defaults on first loans, second loans, equity lines, even HOA dues. If they tell you straight up, its the fastest, cheapest, easiest way to find out.

2. Check with the County Records office if a Notice of Default (NOD) or (NTS) has been recorded.

Depending on where you are, you may be able to view records online, or call the Records clerk for a courtesy check. But, if you have to go to the Records office, it should take less than 15 minutes and its worth the trip.

3. Check whether house is for sale.

Could be a red flag if the house is for sale and for rent. Is there a for sale sign in the yard? Check public access to MLS or ask an agent (who owes you one?) to check on the address.

4. Ask for proof that loans and liens are current.

This is a fairly major transaction for the stability of your life. Be bold and open (but calm and polite). Let the prospective landlord know that you've heard about renters being forced out shortly after moving in, and you want to get a comfort level ("protect my family") that it won't happen to you.

5. Check the Public Notices section of your local newspaper(s) for NOD and NTS publishings.
Look for the address and owners name(s). Depending on the publication, you may also be able to do this online.

IF YOU'RE ALREADY RENTING

1. Do 1-5 above.

2. Pay attention to notices on your door.

If a loan secured by your home is in default, NOD and NTS are usually required to be posted on the property. If you are strictly enter and exit through the garage portal, get out and check your front door once in a while.

3. Pay attention to your mail.

Are senders promising to buy your home no matter what? Is the mail in the homeowner's name? Don't open it -- just reflect on the sender. Is it from a lender?

4. Pay attention if your house suddenly seems to be getting a lot of attention (looky-loos).

Homeowners who miss a payment often get thrown into a database for "pre-foreclosure" investors. As a matter of due diligence, they will often drive by to preview the house. They may even stop in to try to contact the homeowner (or get some info from you). When homeowners get behind enough to get an NOD recorded, it is now public record. Lenders and other interested parties may also send out agents to get an idea of the condition and value of the "security" and get some external photos.

I wasn't around during the last cycle, but I'm sure this isn't really a new phenomenon. I'm not a big fan of regulation, but I think this issue borders on interfering with other's right to the pursuit of happiness. Maybe we can start a grass roots movement to get a couple of basic laws passed. Here are my proposals:

ONCE A LOAN/LIEN IS IN DEFAULT AND THE FORECLOSURE CLOCK IS TICKING

1. Require the lender to post and NOD prominently on the subject property. (Again, this may already be required in some states.)

2. Require the lender to send a letter, addressed to the current resident, indicating that the loan is in default, on the basis that occupants have a "need to know".

3. Require landlords to disclose in the rental agreement whether loans/liens are in default.

4. Give tenants right to break lease (if applicable) if NOD is recorded, if desired.

5. Give tenants right to apply reasonable portion of security deposit toward last month's rent if NTS is recorded. In other words, last 30 days prior to sale. (Landlord would need to perform preliminary inspection to estimate withholding--tenant not relieved from responsibility to take care of property.)

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