In the foreclosure crisis of 2007, thousands of American families are losing their homes without ever missing a payment. They are renters in houses whose owners default on their mortgages ”” a large but little noticed class of casualties.
Some live in big apartments, others in houses owned by small investors who got in over their heads.
There are no exact figures for how many renters have been evicted because of foreclosures, but a survey taken this year by the Mortgage Bankers Association found that one in eight foreclosures was non-owner-occupied. This figure probably underestimates the problem, according to the association, because buildings receive tax benefits if they are registered as owner-occupied. More than one million properties are expected to enter foreclosure this year.
Many renters say they never even knew their buildings were heading for foreclosure.
“This is an explosion,” said Judith Liben, a lawyer at the Massachusetts Law Reform Institute. “This isn’t business as usual. These are investors that overleveraged themselves, and the renters are collateral damage in the mortgage crisis.”
Yeah, that looks like a strong possibility for my family at the moment. “For Sale” sign has been out for 4 months, landlord has already lowered the price to below what he paid 18 months ago, and few lookers. We’re holding off on the decorating. 😉
I never quite understood the logic which gives a tax break to the landlord for interest he pays on the mortgage of his rental property, but not to the renter, who (indirectly) is actually paying this interest.
Wilfred — The intention of the mortgage interest deduction is to [i] encourage[/i] home [i] ownership [/i]. By its very definition, it would not encourage home ownership if the government where to extend the benefits of the mortgage deduction to renters.
Also, an indivudual may only claim the mortgage deduction on up to 2 homes (the primary residence and a second home). Assuming that the typical landlord owns more 2 or 3 houses, it is unlikely that the landlord is getting the tax break that you refer to — at least not through the mortgage deduction.