Oh, those poor, poor banks

The Modesto Bee Tips for renters: "Demand in writing that the new property owner (the lender that foreclosed) return the entire security deposit. California Civil Code Section 1950.5, subsections H and J, makes the new property owner 'jointly and severally liable with the landlord for repayment of the security.' The new property owner also can be taken to small claims court."

I know it's unpopular to care about the big, soulless banks, but when a bank loses, their investors lose. Banks are a popular "conservative" investment for little old ladies and other retirees.

I have seen ads on craigslist.org selling everything - right down to the air conditioner compressor and water heater tank - before the bank forecloses. Sleazy flippers rent out the home when they realize it's going to foreclosure - better to get a few months' rent than nothing - and leave the bank on the hook to evict the renter AND return the deposit. And then, while the house sits vacant, theives move in to strip the electrical wiring and plumbing for salvage. The result is a thoroughly trashed house that, by some accounts, is effectively a tear-down.

If you have no sympathy for the banks, consider what this means to future buyers. The old-fashioned idea of a mortgage was that the worst a homeowner would do was default. After banks get burned on stripped houses, rental deposit refunds, et. al., they're going to build that risk into future profit expectations.

Ugh.

P.S. I thought that rental contracts attach to the property under California law. Apparently, that only applies to private-party sales. According to the referenced article, "After foreclosure: Don't pay rent to anyone. The previous landlord doesn't own the home anymore, so the rental contract between the tenant and the landlord is void. Lenders that foreclose on the property become the new owners, so renters must negotiate new rental contracts with them before rent is due."

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