Renting after Bankruptcy and/or Foreclosure


House For Rent

It’s a fact, many homeowners are being foreclosed leaving them to rent while recouping and rebuilding. Having a recent foreclosure can make renting hard because landlords fear you might have a problem paying rent or late paying the rent. Fortunately, you can still rent after a foreclosure and/or bankruptcy.  Many landlords are undeterred by foreclosed former homeowners as long as other credit is good. Many landlords will understand the need of a bankruptcy and such eliminated most other debt leaving the prospective tenant a lesser burden to pay the rent.

Still, you need to be selective on your prospective landlord, too. Follow the tips in this on-line rental fraud detection tool and you will certainly have your first line of defense reasonably well covered.

Find No Credit Check Apartments and Houses

Large apartment complexes are typically owned by companies that have strict corporate approval criteria. Ask the manager if they exclude folks that have had a foreclosure. Again, you need to do some screening too.

You’re more likely to get a credit check at one of these complexes (and denied if you have a foreclosure) so don’t apply where you know you are going to be denied. Why suffer the brain damage and humiliation?

Instead, look for houses, condos, townhomes, duplexes, and small apartment buildings that are owned by a single landlord. These types of landlords are less likely to do credit checks. Look for these types of residences:

  • Check for signage by driving or walking the neighborhood you like.
  • Ask friends and family. Ask social media friends.
  • Check craigslist but be very careful as there is much fraud in the public arena. Here is another excellent fraud detection tool.

Rent Before It Hits Your Credit

If you apply for an apartment before the foreclosure is updated on your credit report, you have a better chance at getting approved. Timing it is tough since many people don’t realize foreclosure is inevitable until it’s happened. This is a result of what is referenced as the dual track system. So when it’s time to get out of this place, think of this Eric Burdon featured tune.

Bring a Co-Signer

You can get approved for an apartment, even one of the larger apartment complexes, if you have a co-signer or guarantor. Keep in mind your co-signer will be responsible for any unpaid rent or damaged done to the apartment when you move out. I am one of those who refer to cosigning as financial ‘suicide by pen.’

Keep Paying Your Other Bills

A foreclosure or bankruptcy might set you back, but it won’t ruin you, unless you let it. Continue paying your other bills. People with foreclosure often have more 90-day late pays to explain on their credit reports than those who haven’t gone through foreclosure. Those late payments make you even riskier in the eyes of a landlord. If you can prove to a landlord that defaulting on your mortgage was an isolated incident, you may be able to rent despite your foreclosure.

Rent To Own

As I’ve previously written about this subject, this is most often a very bad idea. With very few exceptions, I have never seen a financially advantageous rent or lease to own contract. This is not to say they don’t exist. This is to say you need an experienced real estate attorney to review the document(s) for you prior to your entering such an agreement. I have seen back to back fraudulent lease-to-own situations. Use care, you do not need to buy someone elses problem unless it is good for you.

Don’t Lie

“Don’t ask, don’t tell” is a good philosophy to follow when it comes to renting after foreclosure. However, lying about it will probably cost you a rental opportunity. If you’re asked if you’ve ever had a foreclosure, be honest. Explain the situation and focus on how you’ve turned your finances around. Make sure the landlord understands that what caused the bankruptcy and/or foreclosure won’t cause you to be late on your rent.

Take a proactive stance by explaining your situation, be brief and forthright with the property owner or manager. You can also sign up for a service such as Transunion’s SmartMove* . “Your credit rating is completely unaffected. The screening process is quick, easy—and all online. Only limited information is provided to the Landlord – your SSN and account numbers are not provided.”

Rental Payments And Credit Reporting

Rental Karma*, a Denver based company will report your rental payments to one of the three national Credit Reporting Agencies.

What You Can Expect To Pay

Landlords and tenants may use the free software provided by RentMetrics* to get a sense of market rates by entering an area or an address and reviewing reasonably accurate pricing information of comparable units in the address’s neighborhood.

* I am not paid by nor do I endorse any business or website referenced in my posts.

Financially SpeakingJames Spray CCMB, CNE, FICO Pro | CO LMO 100008715 / NMLS 257365 | September 5, 2011
 
 Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.

15 comments on “Renting after Bankruptcy and/or Foreclosure

  1. tony powers says:

    James, while i on’ have to worry about the above issues, thank you for “liking” my post cell hell. continue…

  2. James Spray says:

    Hey all – http://rentscoper.com/ is now nationwide. Nifty tool. Some are links to agents others to Craigs list.

  3. James Spray says:

    If landlords use credit scores to deny, request higher deposit, etc., the landlord has a higher requirement to disclose – http://realtytimes.com/rtpages/20110927_landlords.htm

  4. James Spray says:

    Here is a related link to a good article on Huffington Post – http://tinyurl.com/3d4yoaw – Has not only to do with walking away and how but a great comment on “screening” a landlord near the end.

  5. James Spray says:

    To ensure that your payments are recieved by the landlord, send your monthly rent payment on a timely basis with proof of receipt of the payment from your landlord. This can be done with overnight mail, Certified Mail Return Receipt requested or simply make your payment directly into landlords account so your payment always clears on time. Tip of the hat to Justin for this suggestion.

  6. James Spray says:

    Lexis Nexis to Screen Tenants – multiple levels of screening including credit, civil and criminal history.
    http://www.housingwire.com/2011/10/26/lexisnexis-to-screen-tenants-in-expanding-multifamily-market

  7. James Spray says:

    This is another reputable web site to seek rental informaion -
    http://www.rentals.com/

  8. James Spray says:

    Denver rental vacancies edge higher in third quarter
    http://tinyurl.com/6ryh6qd

  9. James Spray says:

    More on the story of Denver rental vacancies rising
    http://tinyurl.com/7jy8xdw

  10. James Spray says:

    NYT – Renters getting credit rated 1/5/12
    http://tinyurl.com/6nfm26q

  11. James Spray says:

    Good article on the subject by a bankruptcy attorney:
    http://bit.ly/T3r4ep

  12. James Spray says:

    Anong the more recent rental search engines is: http://hotpads.com/

  13. James Spray says:

    Interesting concept – a Denver company will for a startup fee + a monthly subscription report your rental payments to one of the three national Credit Reporting Agencies. Unfortunately they appear to only report to Experian which offers to increase your credit scores. The catch is that these are not the FICO Scores that are used by the vast majority (over 90%) of lenders and all first mortgage lenders. For more information read:
    (this is not an endorsement but an informational reference) http://rentalkharma.com/ and (for balance) http://wp.me/pW0QQ-4d.

  14. James Spray says:

    Remotely’s Home Automation Features
    Why Is Remotely The Only Choice For Property Managers? Why Will Your Residents Love Remotely?
    http://rentbits.com/rb/remotely/

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