Checking Tenant Credit Reports in the Foreclosure era

May 26, 2011 - 2:16 pm | By

In these times of recession, you’re bound to see poor credit scores and derogatory credit information on your potential tenant’s credit reports. Many tenants are property owners who are somewhere in the mess of foreclosure or attempting a short sale. They can be desperate to find housing and that’s why they are applying to rent your property. One thing to be aware of are tenants who claim their poor credit score is due to their foreclosure strategy. In order to qualify for a loan modification they actively refuse to pay their mortgage and thus their score suffers. They claim they really are sound financially but are strategy trying to get off mortgage. If this is true, consider the implications. No matter how unfair the mortgage situation might have been for them, the fact is they are refusing to pay a financial obligation that they agreed to. They read the loan docs, (or they were supposed to) and a notary notarized their signature. Even if you agree that their situation was unfair, do you agree with their payment strategy? Now consider if they have elected not to pay a large bank with the full weight of a huge financial institution behind them, why would they pay you, a property management company, or a single property owner?   Proceed with caution.

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