By Mike Stetzer
While homeowners who have recently been foreclosed may not easily be able to secure another mortgage, they won't be turned away by most landlords, according to a recent survey conducted by the National Association of Independent Landlords.
Many people who have had their homes repossessed by the bank will move in with family, but this data indicates that they may not have to - 82 percent of landlords say they'll rent a property to a person who has just lost a home to foreclosure, as long as that foreclosure is the only negative item on their credit report.
"Landlords typically won't rent to applicants with poor credit - and a foreclosure will absolutely slam someone's scores. The exception is when they see people who have paid their bills their whole life, but lost their job, can't meet their mortgage and must hand their keys back to the bank," said Tracey Benson, president of the landlords' association that conducted the survey.
Landlords are also sympathetic to the toll the recession took on many working families, and don't necessarily see a foreclosure as a red flag that the prospective tenant is a poor risk.
"Often, they lost their jobs and homes through no fault of their own," Benson said.
The willingness of landlords to rent to recently foreclosed homeowners may be a good sign, as Experian recently added timely rental payments to the traditional credit file it keeps on consumers, according to the Los Angeles Times. Due to this change, those who pay their rent on time can gradually boost their credit scores. The fact that landlords appear willing to rent to foreclosed Americans may mean that those who have been subject to foreclosure and have watched their credit scores plummet as a result have a relatively simple way to recover their good credit standing.
The good news doesn't apply to all homeowners, however. The National Association of Landlords says that the findings of its survey can partially be explained by the fact that most foreclosed homeowners today lost their homes through no fault of their own, unlike the "subprime" borrowers who made up a larger portion of foreclosures in recent years. If a homeowner is discovered to have bought a home he should have known he couldn't afford, or if the foreclosure is just the most recent event in a string of bad financial decisions, landlords may be less willing to draw up a lease.
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