Renters are the Next Victims of Foreclosures

Property foreclosures have bitten hard to renters with builders facing huge financial crisis. This article highlights some of the key aspects related to the real estate burst happening in major cities and towns across the United States.
| Monday, November 30, 2009
The newest victims of property foreclosures are not someone with a mortgage in default, but the renter who lives in a multi unit building. Many renters are finding that the owners of their buildings are going into foreclosure and they will soon find themselves in jeopardy of losing their housing. Large investment firms that believed the real estate boom was an endless gravy train now find themselves unable to make the repairs necessary to maintain the property or to make the mortgage payment.

Living conditions in these properties is steadily declining. Leaky pipes, broken locks even collapsing walls are becoming more commonplace as the landlords struggle with payments. Many tenants are finding that as they approach the cold winter weather they will be doing so with improper heating equipment and leaky windows.

High unemployment keeps apartments vacant as well as many tenants behind in their payments. Building owners facing this financial crisis, along with decreasing values of their property and the inability to draw funds from its equity, state this is the reason for the late payments and disrepair. 

This situation is prevalent throughout the country. While many of the major cities such as New York, Atlanta and Detroit are seeing many of their apartment buildings fall into ill-repair, this same thing is happening in smaller towns throughout the country. Fannie Mae has reportedly foreclosed on 475 units in the Washington DC area in the first three quarters of 2009 alone. When authorities were consulted about the issue in New York City, it was estimated that 50-100 thousand single apartments could be affected by foreclosures this year. This is countless families displaced and thousands of multifamily buildings that could be left for ruins.

While Fannie Mae states that it allows for repairs and other necessary expenses during a foreclosure proceeding, families living in the disrepair have not often seen these repairs take place. Fannie Mae, as well as other lenders, of course want to keep the properties as safe and livable as possible. They can not resell the property and recoup their money if the buildings collapse. But many feel this is just a noble notion that does not really show in the real world.

Financial analysts believe this is just the beginning of a problem - the proverbial tip of the iceberg. As these mortgages begin to fail the rate of failure will escalate over the next year or two. Financial analysts believe that the failure rate of multi family units could proceed to reach 65 – 75% when the crisis fully emerges. Statistics show that these mortgages are way over valued and that refinancing options are not available. Paying these mortgages will become a problem, and very soon.

Many of the investment companies that purchased these units did so with the intention of turning over the tenants for higher paying tenants in the future. Many of these mortgages were obtained without having the proper income to cover the expense. It was a grand notion that in the future they would have higher paying tenants and be able to cover the expenses. They did not foresee that unemployment, a crashing economy and empty rental units would eventually lead to their inability to cover the maintenance and mortgage expenses.

While foreclosures are bad for anyone, renters will eventually be hardest hit by this crisis. Renters are forced to live in substandard conditions since maintenance is often the first thing to be ignored when there are money problems. Obtaining money to move into a different building if the property is foreclosed is an expense that many can not afford. Too many people live where they are simply because the economy is rough and they can not afford to be anywhere else. Many will be forced to endure cold weather, rodent infestations and even collapsing walls as they await this next foreclosure crisis to subside.

ForeclosureFreeSearch.com is one of the largest databases of  foreclosures on the internet. View all the latest home deals in your area.
   
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