Sitting at her kitchen table, combing through her lease and a 4-month old foreclosure notice, I didn't have the heart to tell Dana Walker there's not much I can do.
Since August 2007, Walker and her fiancee Jack Johnson have been on a verbal month-to-month lease after finishing a year-long written agreement to rent one of Cecil Pettis's properties in Hernando, MS. In December, they received written notice that Pettis had defaulted on the mortgage.
The home will be sold as a foreclosure. They will have to leave.
"It's been very stressful. Very stressful," says Walker. She and Johnson have a young daughter and a baby on the way. Johnson's away on military leave.
Pettis, who recently opened his own realty company, faces 16 foreclosures on his properties, including his own home.
He says he hasn't paid the note on Walker and Johnson's rental since last March, even though the couple paid the rent between March and December's foreclosure notice.
"I ended up using the rent for everyday expenses," says Pettis, who has allowed the couple and their daughter to stay in the house until the bank sells the home. "All in all, it has been a tough economic time for me."
Pettis also asked that I post this written statement word-for-word:
"I appreciate you giving me an opportunity to tell my side of the story. I feel great concern for Jack and Dana's situation but I feel you need to know four things: 1. Dana and Jack were on a month to month lease with me subject to a 30-day notice from either party. 2. In early December I told Jack and Dana they needed to find another place to live. 3. I attempted to help Jack & Dana purchase the home but at least one mortgage company could not get them qualified to purchase (the) home. 4. Jack and Dana have been living in the house rent free for a period of 3 1/2 months. I appreciate you understanding that there are two sides to every story."
Sapna V. Raj, managing attorney for the Memphis Fair Housing Center with Memphis Area Legal Services (http://www.malsi.org/), says the only way a renter can fight a foreclosure is if the mortgage is with Fannie Mae or Freddie Mac, the stockholder-owned and government-chartered purchaser and lender of home loans. She says renters can negotiate with Fannie Mae or Freddie Mac to stay in those homes for the remainder of their leases. She says they may also alter their leases to go month-to-month so that they may shop other living arrangements.
But if the note is held by a private lender, Raj says there is absolutely nothing renters can do. A default on the loan trumps the lease.
She also says even though Pettis has been gracious with letting Walker and Johnson stay in the house rent-free, dropping the rent -- or a renter deciding not to pay the rent once there is a foreclosure notice - is a bad precedent.
"The (foreclosure) sale hasn't taken place yet," says Raj. "The tenant still has an obligation to pay."
Walker says the foreclosure sale is slated for May. She and Johnson are working with a loan officer to purchase another home in Hernando and get out from under Pettis's foreclosure.