Federal law protects tenants facing eviction from landlord's foreclosure
A federal measure gives most tenants at least 90 days to find a new home if their current rental is foreclosed upon.
Q. I signed a one-year lease for my home in July and have faithfully made my rental payments on the first of each month. Now I have received a letter from the landlord's mortgage lender that says the property will be sold at a foreclosure sale on Jan. 10 and that I must move out immediately. What are my rights here? Can the bank legally void the lease and force me to move out now?
A. No, the bank can't kick you out — at least, not yet — simply because your landlord is in foreclosure.
Renters accounted for a staggering 40 percent of all families facing foreclosure-related evictions last year, according to the nonprofit National Low Income Housing Coalition. Many didn't even know that their landlords were in financial trouble until they were contacted by the bank, because investors want to keep the monthly rental cash rolling in even if they aren't making payments to their lender.
Congress approved a federal law last year to help tenants in such precarious situations. Called the Protecting Tenants at Foreclosure Act, it guarantees that most tenants get at least 90 days after a foreclosure sale to move out. And, if the new buyer doesn't want to make the property his personal residence, the law generally allows a tenant who's paying fair-market rent to stay through the remainder of the lease.
A good overview of the federal law can be found on the Internet site operated by respected legal publisher Nolo Press, www.nolo.com. Some individual states and municipalities have approved measures that grant tenants involved in foreclosure proceedings even greater rights, so contact your local rent board or similar agency for details.
Q. What is the most popular color to paint a house? I'm just curious.
A. It's white, according to the online Realty Times magazine, followed by gray, blue and then either tan or brown. The publication says that about 37 percent of all homeowners would choose plain ol' white if they were to repaint today.
Q. I have lived with my mother in her home my entire life because Mom is permanently disabled and needs my care. Does the fact that I have never paid rent or had a mortgage negatively affect my credit score?
A. No, your lack of a history of paying rent or a monthly home loan neither helps nor hurts your credit rating.
Of course, having a mortgage and making the payments promptly will improve a borrower's credit score through the years. So although your own score won't suffer because you have never had a home loan, it's not as high as it could be if you had a long string of on-time payments in the past.
Q. After years of hard work and saving, in May my husband and I finally had enough money to purchase a small vacation home with a large down payment and a small mortgage. Are the monthly interest payments we have made on the loan tax-deductible? If they are, do we have to use the vacation property a specified number of weeks this year to claim the write-off?
A. Current Internal Revenue Service rules generally allow property owners to deduct interest charges of up to $1 million in combined mortgage debt on a first and second home. So, even if the loan to buy your vacation home in the spring was $200,000, you still could be eligible to write off all of the finance charges on both loans if the mortgage to purchase your primary residence was $800,000 or less.
You could deduct finance charges on an additional $100,000 of borrowing if, say, you took out a home-equity loan on your full-time residence to remodel or pay bills.
Order a free copy of IRS Publication No. 936, Home Mortgage Interest Deduction, by calling the agency at 800-829-3676 or by downloading it from www.irs.gov.
I admire that you and your spouse have worked hard for so many years to save up for a vacation home, and I'm happy that your dream has finally been realized. But I must also (mildly) scold you: Purchasing a second home typically involves major tax issues that should be addressed by an accountant or similar professional before, not after, a deal is finalized.
• For the booklet “Straight Talk About Living Trusts,” send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960
© 2010, Cowles Syndicate Inc.