Legal Question in Real Estate Law in California

Re: Eviction of the tenant

The practice may be a variety of rent skimming, which is sometimes a civil wrong and sometimes criminal. Generally speaking, taking rent but not paying the mortgage is a civil wrong when done in the first year of ownership, and becomes criminal when the same person engages in multiple acts of rent skimming.

The definitions and penalties are in the Civil Code. See sections 890 to 894, available on line but too lengthy to quote here.

In addition, even if the skimming does not rise to the level required by the statute, perhaps because the landlord is beyond the first year of ownership, the practice is probably a violation of the covenant of quiet enjoyment that would be at least an implied term of your lease (assuming you have a lease rather than being month-to-month). So, there's a likely contract action here, for breach of the lease.

As to a fraud cause of action, you could try it along with a breach of contract cause of action, but I think it would be more difficult to plead and prove - unless, of course, the landlord made specific representations to you about his financial condition at the time of the leasing and they were not true at the time.

Re: Eviction of the tenant

The tenant either pays the rent timely or gets evicted. The tenant has no interest in what the landlord does with his money or his lender. If the house gets foreclosed, you'll get evicted by the bank or the new owner someday, and won't have to pay the landlord rent anymore.