Foreclosure can leave renters homeless
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See if federal rules apply. If you're living in government-subsidized housing and the property is foreclosed on, you may have a right for assistance in the form of a voucher, says Sullivan. While you will likely still have to move, you may be awarded some relocation expenses. To find out if you qualify, check with your subsidizing agency.

Check public records. In some cases, a new owner may not be able to evict you if the lease predated the mortgage loan. The best way to find out when the mortgage loan was taken out or if the mortgage was refinanced since your lease was drawn up is to check county records, says Christopher Combs, a real estate attorney in Phoenix. If your lease is older than the mortgage agreement, contact an attorney because the case, "depends upon the loan documents, which need to be looked at carefully," Combs says.

Demand a refund of your deposit. Depending on the state, landlords have a set amount of time to return a security deposit. Despite the foreclosure and eviction notice, your landlord should not walk away without meeting this obligation. If your landlord fails to pay up, write a letter (to establish a paper trail) requesting your security deposit and also informing the landlord that you will follow up with legal representation.

Contact the lender or new owner. If you don't want to move, you can always contact the lender or new owner to see if they would be interested in letting you continue to rent the property. Your chances may be better if the new owner is an individual rather than a bank, because banks typically want to unload properties as quickly as possible. However, understand that the new owner has no obligation to agree to your request.

Look into "Cash-for-Keys" programs. Some lenders offer financial assistance to renters if they will vacate the property by a certain time or leave it in good condition. While such a program won't save you the hassle of moving and it may require you to move even faster than you'd planned, it may be worth it if it will give you a sizable amount to put down on a new home or apartment. The lender may not approach you with such an offer, so ask for it.

Protect your credit rating. If you know your landlord is in the process of foreclosing, you may be tempted to skip your rent payments. Until the foreclosure is complete and the new owner lets you know you are being evicted, you are still responsible for paying your rent. For all you know, your landlord may get a cash windfall that enables him to stop the proceedings at the last minute and you'll be faced with an eviction notice for failure to pay your rent.

Channel your efforts and energy. While you have no recourse for suing the lender or new owner, you can, conceivably, sue your former landlord for breach of the rental agreement. However, lawsuits cost time and money, and all of the effort may be for naught because, "Most landlords that can't make their payments don't have very many assets," Combs says. Your time may be better spent looking for a new home and getting as much financial assistance as you can in the forms of your deposit and any fees being offered by the lender.

With so many people and businesses dependent in some way on the real estate market, renters are just the latest group to feel the brunt of a depressed industry.

"Basically it's a pretty bleak scenario," Combs says.