By Kevin Chiu
The threat of bad credit isn’t hurting millions of former homeowners who have undergone foreclosure when it comes to finding a new place to live. Landlords are even getting used to hearing from foreclosure victims applying for homes and apartments to rent.
In fact, the plight of former homeowners isn’t even considered by most rental companies any longer, much like medical bills have been excused in the past.
“It’s just a part of doing business anymore,” said one New York City rental agent, who asked not to be named. “We’re seeing all sorts of people who have been through the housing mess, and they aren’t having any trouble finding a place to rent.”
Bad credit when it came to foreclosures was once considered a death blow for renters, who would have to put up hefty deposits if they could even get a landlord to rent to them. But as the foreclosure crisis mounts, taking the homes of more than 7 million so far, rental agents are looking the other way.
“Foreclosures on your credit don’t cause a problem at all,” said Martha Ruiz, a licensed real estate agent with six years experience in property management in Santa Maria, California. “They don’t hurt anymore at all,” she said with a chuckle.
Foreclosures are all too common in Ruiz’s line of work, where those who have suffered through a foreclosure seek rental homes and apartments to keep a roof over their heads.
Millions of former homeowners are walking away from homes as a result of being upside down on mortgages. Others owe too much on loans they feel will never get to even a break even point, and make the point that after banks and mortgage companies offered loans to artificially inflate the housing market they aren’t going to be able to break even in their lifetimes.
“I wasn’t going to hold on to a losing asset,” said Saul Klein, a former homeowner whose home was foreclosed in February in a Los Angeles suburb. “I didn’t have a problem renting a house for my family. We’ll buy another home when things improve with the economy in a few years. Who knows that may take a decade.”
Klein looked at walking away from his $600,000 plus mortgage much like “companies do business every day. There was emotion involved, but I wasn’t going bankrupt over the loan,” he said.
With credit that has been reestablished by paying credit cards, auto payments and other bills in a timely fashion, former homeowners who suffer through foreclosure could be able to borrow money on a new mortgage in as soon as three years.