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More than 2 million foreclosures were initiated by lenders in 2008. While no state has been left unscathed; residents of California, Florida, Texas and Nevada took the hardest hit. Arizona and Colorado reported a 40-percent increase in foreclosure filings; while, Washington D.C., Maine and Vermont had the lowest filing rates.

Foreclosures have become the nightmare version of the American Dream. The uncontrolled sub-prime lending practices ripped the rug out from under millions of unsuspecting citizens and crippled the housing market.

Homeowners aren't the only people being displaced. An alarming number of tenants are kicked to the curb with little legal recourse. It has been estimated nearly 20-percent of foreclosed homes are rental properties. This interprets to more than 330,000 tenants who are forced to move through no fault of their own.

To make matters worse, tenants usually lose their security deposit and have to incur moving expenses. For families living paycheck-to-paycheck, unexpected foreclosures can cause serious financial hardship. Being forced out of rental homes due to foreclosure is even more difficult for the elderly and people with chronic health problems.

The Mortgage Reform and Anti-Predatory Lending Act of 2007 provides foreclosure protection for renters. According to the bill, "In case of foreclosure any successor who takes over the property will have to honor pre-existing leases. Tenants without a lease will have at least 90 days before being required to vacate."

However, this does nothing to alleviate the challenges of locating affordable rental property or the stress of moving. Nor, does the mortgage reform bill helps renters receive reimbursement for loss of deposits, rental monies, or moving expenses.

Currently, tenants have few rights when it comes to foreclosures and eviction. In most cases, renters will need to pack their belongings and move. However, there is one important piece of advice to help avoid running into the same problem in the future. Ask to see cancelled checks payable to the lender for the previous 12 months; along with a copy of paid property taxes.

While this is no guarantee the homeowner won't fall into foreclosure in the future, renters can feel a bit better knowing their landlord is current on their mortgage note and taxes.

Additionally, consider working with a reputable property management group. Although landlords are not required by law to inform property management groups of impending foreclosure, tenants may have a better chance at legal recourse when working with a third-party service provider.

In the event of foreclosure, property management groups may be able to help tenants relocate into other properties managed by the group. Some may even transfer the security deposit to another rental property.

Keep in mind, renting in today's unstable market places you at risk. Currently, there is no law requiring landlords to inform tenants of impending foreclosure. It is of particular importance to engage in due diligence when renting houses. Otherwise, you could be put out in the cold when you least expect it.

If you're living in a foreclosure property and are interested in purchasing the home to stop foreclosure, consider engaging in a "Subject To" transaction. Our comprehensive foreclosure and real estate article library offers our readers options to messy situations.