‘Capital Insights’ with Jack Kern: New Rent Regulations Go Into Effect on Foreclosures
- Jul 02, 2009
“Nothing is more damaging to a state than that cunning men pass for wise.”
Francis Bacon (1561-1626)
There are an estimated 5 million homes in foreclosure, with the total potentially rising to 7 million. One of the facts coming to light is that as much as 40% of these are investor- or syndicate-owned and leased out to renters. As these houses are falling into default, many of the owners are pocketing the rent payments and letting the renters discover for themselves that they are being evicted, even though they’ve paid their rents on time and consistently. Recent legislation now makes it harder for the bankers and court appointed receivers to evict the renters. If the renter has a lease, they are given the term of the lease plus 90 days to move out. If the renter is on a month-to-month term, then they are given 90 days to move. If no lease is in place, then it’s up to the discretion of the court to decide, based on hardship and other socio-economic factors.
We’ve made mention before about how the foreclosure process has been a negative factor for professionally managed units and now at least the new legislation brings some additional order to the process. While it would be best for the foreclosed inventory to be closed out finally, at least this step avoids the constant lobbying and meddling by local governments with rules in effect that differ by county. It would be smart for owners to monitor court proceedings and potential evictions as these residents are going to need a place to go and their choices, at least by foreclosure standards, are becoming more narrow.
(Jack Kern is the managing director of Kern Investment Research,
Germantown Md. You can reach him at 301.601.1900 or