Will the mortgage company take action if the landlord is way behind the mortgage while there is a rental agreement in place?

The mortgage company can take action but must honor a valid lease once they have control of the property. A tenant is such a situation should keep track of the status of the foreclosure to be sure that they pay the rent to the owners of record.

The tenants won't influence a decision on foreclosure on the mortgage. Tenants at foreclosure cannot have their tenancy terminated willy nilly, however. They are entitled to the balance of their term tenancy or 90 days, whichever is longer. The rent will go to whomever bought the property.

As of May 20, 2009, the Protecting Tenants at Foreclosure Act (PTFA) provides that a successor in interest through foreclosure sale takes the property subject to an unexpired bona fide lease. Thus, tenants who entered into a fixed term lease before the notice of foreclosure may remain in possession of the property for the remainder of the lease term. The PTFA allows a successor in interest to terminate an unexpired lease, on 90-days notice, where they plan to occupy the unit as their primary residence. To qualify as a bona fide lease under the PTFA: Data in Image The tenant may not be the mortgagor or the mortgagor's child, spouse, or parent; Data in Image The lease must be the result of an arms-length transaction; and Data in Image The rent due under the lease must not be substantially less than market rent unless the rent is reduced by a subsidy. The rights of a bona fide tenant depend on their lease having been entered into before the "notice of foreclosure." The amended version of the PTFA clarifies that the date of a notice of foreclosure, as that term is used in the Act, is the date of a completed title transfer. The PTFA was originally set to automatically expire at the end of 2012. However, the Dodd-Frank financial reform bill passed in 2010 by Congress extended the Act through the end of 2014.

The mortgage company can foreclose at any time.

The mortgage company can, and will, take action immediately upon default. And foreclose there are some protections in place for the tenants. but not many. Mostly notice provisions.

They can take action and their rights generally trump that of a later arriving tenant.