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Are Some Renters Paying Rent On Foreclosed Homes?

POSTED: 6:31 pm PDT October 21, 2008
UPDATED: 6:47 pm PDT October 21, 2008

A South Bay home is where two servicemen used to live.

While they were overseas, they kept paying rent to a homeowner whose property was under foreclosure.

It's a house with quite a history.

"Unfortunately, with this subprime tragedy that we're going through, his payment went up and he couldn't hold on to the home. During this process these people are paying rent," said

The property owner said she accepted the payments because she believed the bank would negotiate a new loan.

However, realtor Marilyn Swartz said the tenants were never notified.

"Unfortunately, these young men were not made aware of that because the previous owner did not contact them," said Swartz.

Meantime, the property owner said she had every intention of keeping the home. She said she also notified the tenants the minute she found out about the foreclosure.

While this isn't the case for this property, Swartz said some property owners pocket rent money during default.

"I think people need to be aware of the fact that if you're renting keep an eye on what's going on," said Swartz.

Legal experts said landlords must give tenants a 30-day notice, and owners must also pay back deposits.

The problem is if a property becomes foreclosed, most owners have no money to give back.

The two Marines are still on active duty in Iraq and Afghanistan.

The realtor said she maintains communication with them.

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