Tenants nationwide who did nothing wrong except to rent from a defaulting owner are suffering from the mortgage fallout as well. In most states, foreclosure voids leases and banks move quickly to get tenants out. Banks traditionally press renters to leave quickly so that they can resell the property. Depending upon the state, tenants get between three and 30 days notice and a few states have laws protecting tenants from eviction in the event of foreclosure and others are moving to give renters more notice.

In many cases, the homes and apartments entering foreclosure are owned by investors who got low-rate teaser mortgages and intended to hold the buildings for a few years and then sell them at a profit - before their mortgage rates rose. Now, with the housing market depressed in many markets, the owners can’t sell the homes or afford the higher mortgage payments. So, if you are a renter you might want to check on the financial health of your landlord, watch for signs that they may be in trouble, especially if you know they have recently purchased the property. A large number of recent investors are unsophisticated and do not know how to handle negative cash flow. Here are a few warning signs:

1: Non-Payment of the water bill.
2: Diminished services - has the gardener stopped coming by?
3: Deferred maintenance - has the roof been leaking for a while now?

This week’s Real Estate Insight:

If you are renting, do yourself a favor and check out your landlord’s financial health, otherwise you may be an unexpected casualty of foreclosure.

Considering how volatile the Mortgage Business is today, now more than ever, it is important for people to deal with reputable mortgage specialists when arranging financing. Take the much-publicized rate cut by the Fed last week for example. The Federal Reserve lowered short-term interest rates by half a percentage point, to 4.75%, in order to combat the effects of a weaker housing market and tighter credit on the economy. While consumers should start to feel the impact in the form of lower borrowing costs, it is not the magic pill that is going to solve the mortgage worries. In fact, rates are creeping up to 6.5% this week for a standard 30 year. So what does it mean for the consumer?

First the Lucky Ones:

1: Borrowers holding loans tied to U.S. banks prime rate: Many banks cut their prime rates by half a percentage point after the Fed move. People with loans tied to this rate should see relief soon.

2: Borrowers with home-equity lines of credit: Savings could start next month. You should see better rates if you are in the market for a new fixed-rate home-equity loan.

3: Credit Card customers: Should soon see some relief. About 85% of all credit cards carry variable rates. Holders of these cards will see a benefit only if their current rate exceeds any floors established by the issuers, typically around 14% to 15%, below which their rates can’t fall.

The Unlucky Ones:

1: Most of the Adjustable Rate Mortgage holders: Most of these notes are tied to the London Interbank offered rate, Libor, which rose higher than the Fed rate because of the credit crunch in the markets.

2: Savers: Savers could soon see lower payouts on their savings accounts, CD’s and money-market mutual funds.

This week’s Real Estate Insight:

Examine your current mortgage contract and future loan agreements carefully. If you have an ARM or are considering one, know the underlying index your rate is tied to, when the mortgage will reset or shift to adjustable payments and what the margin is.