Helping a tenant in a foreclosed property

Helping a tenant in a foreclosed property

Real Estate Consultant · Wethersfield, CT · Member since 2009 · 25 posts · 7 votes

I am trying to help an elderly (70 year old) gentleman purchase the property where he is a tenant. He has lived there forever and did not know the property was being foreclosed until a truck showed up one day to tell him they were there to clear the building and lock it up. It nearly gave him a heart attack. He called me, I found out who had sent them (the broker on behalf of the lender) and told them that Mr. B would call the police if they touched one item of his stuff. They left. I spoke to the broker, who had never seen the property and didn't even know the three family home had two rent paying tenants (one a section 8 disabled minority) and got nowhere with him. Finally, I tracked down the lender, American Home Mortgage Service and complained about the way Mr. B was treated. They said it was not their policy, oversight, broker was not authorized, blah, blah. Bottom line, this is a poor neighborhood and I think the broker thought he could take short cuts. Anyway, they said Mr. B needed to be "pre-qualified" by their mortgage broker (which we did for $100,000) and my question now is what do I do next. The broker, who has not put the property on MLS yet is clueless. He told the mortgage guy the property was worth $200,000, it is worth $50-70,000, needs a new roof that is estimated to be $20,000. It is behind a bar and three houses away from a junk yard in the city of Hartford. The broker has never been there and told the mortgage broker he has not seen the property but knows the market. Mr. B has not received any notice from anyone. We sent a letter to the broker asking where the rent should go and his reply was..I don't want to make it harder to evict him so I am not telling you. Any suggestions would help.

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  • Real Estate Investor · OH · Member since 2008 · 4k+ posts · 1k+ votes
    17y

    I would pay the rent to the court if the lender won't take it. In most places, you can claim that there is a maintenance problem that hasn't been fixed and pay the rent directly to the court. That will prove that your client has paid his rent and will protect his interest.

    As far as dealing with the bank regarding the price - who knows? Bankers frequently don't act like rational people!

    Good Luck,

    Mike

  • Investor · Willow Spring, NC · Member since 2009 · 5k+ posts · 3k+ votes
    17y

    I always wondered what a real estate consultant does.

    It sounds like you are in Connecticut as is Mr. B and the property. Connecticut state law should help you concerning landlord/tenant laws (like, how does the new owner kick out the tenants) as well as foreclosure process. Complaining to AHM SERVICING (not to be confused with the now defunct AHM... where my loans are now with Aurora) about the broker's conduct is the wrong audience. In this case, the legal system can and should be used to protect Mr. B's rights.

  • Real Estate Consultant · Wethersfield, CT · Member since 2009 · 25 posts · 7 votes
    17y

    Chris,
    I am a commercial real estate consultant and have been doing it for the past 20 years. I advise companies on buy vs lease decisions, advise on how different lease clauses impact the value of property, help companies in an M&A evaluate the value of leased or owned locations, assist in leveraged sale/leaseback transactions for a fee, complete due diligence for property acquisitions, such as reading all the leases, verify the operating expenses...stuff like that.... As far as Mr B goes, I am helping a friend, not getting paid as a consultant, and since there is no money in this deal, no residential broker is going to help him or I would have gladly handed this off. That is why I am seeking expert advice on Bigger Pockets. BTW, I got him an attorney pro bono, so that takes care of the legalities, I am just wondering how I can help him obtain his wish of owning this property. While I know my way around a commercial deal, my residential experience is limited to buying my own house.

  • Real Estate Investor · ten mile, TN · Member since 2009 · 1k+ posts · 374 votes
    17y

    Colleen, while doing what Mike suggestted through the pro bono lawyer, is it a possibility that an short sale could be arranged where the tennents (plural) are able to co buy the place?

    Getting an section 8 minoraty tennant involved in the purchase may bring into play some rules that the owners do not want to have to play ball with. This would possibly give them some inventive to deal with your gentleman in a more respectable way than they have currently.

  • Real Estate Consultant · Wethersfield, CT · Member since 2009 · 25 posts · 7 votes
    17y

    Thanks, I have learned a few things from both the attorney and believe it or not, Senator's Dodd's office, I called and one of his staff helped wth this information. In May, Pres Obama signed bill S-896 amended S1036 called "Help families save their homes act", which basically says that effective immediately, tenants in foreclosed properties must get 90 days written notice from the lender before any action to evict can be taken, it is more stringent for Section 8 tenants. The attorney says that on day 89 she will file a motion to stay the eviction of both tenants in housing court and given the sympathetic nature of the tenants and the fact that Mr. B has always been a good paying tenant, a stay would almost be guaranteed to be granted.

    I have been told by the broker that the AHMS won't even appraise the property or put it on the majket until all the tenants are evicted as that is their policy. So given that the tenants have not received any notification, we are probably looking at 4-6 months or longer before anything bad happens here. So, I think the lender may want to have a civil discussion with Mr. B and be reasonable about the price. At least that is my hope. Thanks for the suggestion about co-ownership, but the attorney tells me that if Mr. R, (the section 8 tenant) was to purchase real estate, he would probably lose section 8 status because it would increase his assets, but we are looking into that.

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