What happens to a renter if their landlord defaults on a mortgage?

I've been reading about the Wall Street bailout for days. I've been trying to understand what caused it. Now I read an article in the Daily News and in Crain's New York that city renters could be next victims of mortgage mess.





The articles goes on to say that "An increasing number of apartment complexes face possible foreclosures and thousands of city renters could be the next victims of the mortgage crisis housing advocates warn. At least 580 buildings containing 40,000 units have one or more factors that could lead to mortgage default, Crain's New York Business reported yesterday on its website.





Private equity firms bought at least 90,000 affordable housing units in the past four years, many at inflated prices in badly leveraged deals, according to the Partnership to Preserve Affordable Housing.





The Riverton apartments in Harlem and Stuyvesant Town on the East Side are both at risk, according to the Crain's website. Riverton's owners indicated last month that they were on the verge of defaulting.





And Savory Park, a seven building complex in Harlem has been placed on a watch list. Appollo Real Estate Advisors and its partners bought the complex in 2006 for 175 million.





Appollo refinanced a year later, increasing the debt to 367.5 million, the credit rating agency Realpoint reported. The agency called the risk of default on the load "moderate to high."





Housing advocates told Crain's that buyers had unrealistic goals about rent increases. The same lenders caught up in the mortgage free-for-all in single family homes lent them money any-way."





If these companies default on the mortgages (loans), what happens to the renters? What can the renters do? Can the renters do anything?





I live in one of the housing developments purchased by Appollo Real Estate. What can the tenants do?|||I own much much much smaller apartments in Washington State. I bought a small complex which had been foreclosed. All of my loans have a provision which assigns the rents to the lender in case of foreclosure.





If your building is foreclosed on, then whoever takes possession of it will want you to pay them rent. They will want all the tenants in place and paying rent - so don't worry too much.





In all of the situations I have experience with, maintenance and other services suffered some, but then owners in financial distress don't do a great job at that stuff either - so you might not notice too much of a change.





You could move, but I wouldn't. You can protect yourself by keeping good records: your lease agreement, receipt for deposits, receipts for rent - or canceled checks. I think your greatest problem is likely to be poor coordination between the different people likely to be managing your apartments. You can protect yourself from that by having your stuff together.





Good luck|||Rental agreements will be void. The new owner can decide what to charge for rent. If yours is at the market rate and the new owner wants to keep you, you many not notice much change.