You don't have to own a house to get into trouble in the mortgage mess.
Take Rachel Muñoz and her family. They face eviction from their Denver-area home after their landlord skipped out without telling them the house was about to be foreclosed on. Last week, Muñoz took out the trash and found a "demand for possession" notice tacked outside the garage.
"Now my 5-year-old daughter thinks Santa isn't going to find her because we have to move out," she says.
The Mortgage Bankers Association says 1 in 7 of the 1 million-plus foreclosures expected this year are of non-owner-occupied properties—about 145,000 homes. The problem could be worse: Some investors sought to lower their mortgage rates by falsely promising they would live in the houses.
No rights. If a lease has been recorded with the county clerk, renters may have the right in some states to buy a property before ownership passes back to the bank. "But most people are just tenants-at-will," says real-estate attorney Oliver Frascona, "which means they're out of there."
Muñoz had hoped to buy her house and even lined up a mortgage. But calls to the bank's attorneys weren't returned, and the real-estate agent handling the property now says she has to move out before the bank will even consider an offer.