Will I Be Able to Rent After Foreclosure?

You will be able to rent after foreclosure, even if it may be a bit more difficult. You’re already going through the stressful process of foreclosure. But finding a new place to live and moving can be just as stressful.

A foreclosure will remain on your credit report for seven years. But the effects of the foreclosure begin to diminish immediately after the auction. If you want to rent a house or apartment after foreclosure, here are some strategies to help you make that happen.

Be honest and up-front

Many landlords (especially at upscale or “luxury” properties) automatically disqualify tenant applications with recent negative marks on their credit reports. But every landlord will reject an applicant who lies on the rental application. Accurately answer all of the questions in the application. If requested, do not leave off information about the foreclosure. Most landlords run a credit report, so they will discover the foreclosure either way. Starting a new relationship based on deceit is rarely advisable.

Most tenant-screening services pull your credit report, and many also pull eviction filings and court records, so the foreclosure will show. An open deficiency judgment, the balance the lender says you still owe after the sale, often worries a landlord more than the foreclosure itself, and a bankruptcy discharge of that balance can actually read better than an unpaid judgment. Here is whether you will owe money after foreclosure.

Before interviewing with a landlord, get your story straight on what happened with the foreclosure. Tell them what happened, take personal responsibility, and highlight what steps you’re taking to rebuild your credit.

Your other credit history matters, too

A foreclosure on your credit report doesn’t automatically sink your chances with a landlord. Your credit history for other accounts matters, too. If you had a good credit score prior to the foreclosure, make and retain a hard copy of that score prior to its dropping. Some credit score tracking companies also provide credit score history.

If your credit history indicates positive credit behavior despite the foreclosure, a landlord is more likely to look past the foreclosure. If questioned by a landlord or leasing agent, accentuate the positive aspects of your credit report.

Match your housing to your income

Do not attempt to rent a home that your income does not support. That wastes your time and the landlord’s time, too. Even if, for some reason, you get approved, you may not be able to comfortably maintain your lifestyle. A broken lease (or worse, an eviction) following a foreclosure will reflect very poorly on your credit report.

Instead, determine the appropriate amount for you to pay for rent after foreclosure before you even begin your search. That will make your transition to renting a much more pleasant process.

Be flexible

If you have your heart set on a specific property, remain flexible and work with your landlord to try and make it work. Offer a larger security deposit or offer to pay several months of rent in advance. Many landlords will also consider references, whether from an employer, previous landlord, or even a previous tenant. If you don’t have any of these, ask if the landlord would consider personal references.

Establishing trust with a landlord may take some work, but staying flexible and responding promptly to requests goes a long way. If you are declined for one property, inquire whether the landlord has any other properties for which you may be considered.

Rent before foreclosure

It’s easier to qualify for a rental before the foreclosure hits your credit report than it is to rent after foreclosure notes are added to your report. If you have the means and the timing is right, sometimes it makes sense to move well in advance of the foreclosure auction. Whether this is a smart option for you depends upon the number of missed payments, your lender’s reporting policies, your individual financial circumstances, and the prospective length of the foreclosure process for your property.

You can rent after foreclosure

Letting go of a home that isn’t worth what you paid for it may actually turn out to be a blessing in disguise. And renting relieves you of many of the hassles associated with homeownership. Generally speaking, landlords are sympathetic to personal history and will be flexible with tenant requirements. If your income is sufficient and you come across as generally trustworthy, you will be able to rent after foreclosure.

If the foreclosure has not happened yet, you may still have options to stop it, or to leave on your own terms and on your own timeline. Call me at (202) 448-5136 for a free consultation. I handle foreclosure cases in DC, Maryland and Northern Virginia.