johnnymk

Tenants Face Eviction When Their Buildings Go Into Foreclosure

http://online.wsj.com/article/SB1192...rsonal_journal

The mortgage mess is claiming a new group of victims: renters.

Across the country, a rising number of landlords are falling behind on mortgage payments, sending their properties into foreclosure, according to legal-services attorneys, local officials and financial experts -- and in many cases, their tenants are being forced out of their homes. Often, the tenants' first inkling of trouble occurs when they get a letter from the bank directing them to leave the premises.

"They just don't know what to do -- they leave town, move in with their mothers, end up in shelters," says Janet Merrill, an attorney with the Massachusetts Justice Project, a Worcester legal-services agency that runs a hotline for low-income people.

Strong demand and a tight supply is making for a competitive rental market in San Francisco. And experts say it will be January before the full impact of the mortgage crisis on the rental market is known.
Ms. Merrill's group gets four to five calls a day from renters facing eviction resulting from foreclosure. One caller recently received a letter from a bank saying her six-unit apartment building had gone into foreclosure and ordering her to vacate her unit by Oct. 31.

The woman, says Ms. Merrill, had lived in the apartment with her two sons for a month. Before that, they were in a unit in another building that also went into foreclosure. In that case, the woman accepted a "cash for keys" offer of $800 to leave the apartment. When she called the hotline, she told Ms. Merrill, "I want to stay here. I'm so sick of moving."

The scope of the problem recently became clear to Judith Liben, a housing attorney at the Massachusetts Law Reform Institute, a Boston legal-services center. After hearing about tenants' evictions in Massachusetts, she asked other housing advocates across the country whether they were seeing similar problems. The response -- from Nevada, California, New York and other states -- was overwhelming, she says.

In many cases, the homes and apartments entering foreclosure are owned by investors who got low-rate teaser mortgages and intended to hold the buildings for a few years and then sell them at a profit -- before their mortgage rates rose. Now, with the housing market badly depressed in many markets, the owners can't sell the homes or afford the higher mortgage payments. Many are defaulting.

In most states, says Ms. Liben, foreclosure voids leases, and banks move quickly to get tenants out. "Depending upon the state, tenants get between three and 30 days notice," she says. A few states have laws protecting tenants from eviction in the event of foreclosure, and others are moving to give renters more notice, Ms. Liben says.

Renters' woes are beginning to attract wider attention. Yesterday, Eric Rosengren, in his first speech as president of the Federal Reserve Bank of Boston, said that the high number of foreclosures on multifamily homes in parts of Massachusetts "highlights a potentially serious problem for tenants, who may not have known that the owner might be in a precarious financial position."

Ms. Liben summed up the problem in testimony last month before the House Financial Services Committee: "It is now clear that, nationwide, tenants who did nothing wrong except to rent from a defaulting owner are suffering harsh collateral damage from the mortgage fallout." She added that foreclosing banks often refuse to pay the utility bills or make repairs on the properties.

Renters are reclaiming their bad reputation. Plus, more news, tips and analysis on the housing slowdown.In Hennepin County, Minn., which includes Minneapolis and its suburbs, there were more than 3,000 foreclosures last year -- nearly twice the 2005 number. "You just wouldn't believe it here," says Amber Hawkins, an attorney with the Foreclosure Relief Law Project, part of the nonprofit Housing Preservation Project based in St. Paul. "There are areas of [North Minneapolis] that are just decimated. House after house is boarded, vacant and abandoned."

Ms. Hawkins says that banks have traditionally pressed renters to leave quickly so that they can resell the property. But, she adds, "nothing is selling right now." As a result, empty buildings end up sitting on the market and become "magnets for criminal activity."

That also means there are fewer homes to rent -- even though the number of renters isn't declining.

Danilo Pelletiere, research director at the National Low Income Housing Coalition in Washington, says that in the short term, the number of renters is going to rise faster than the number of available units. "What do you do with the foreclosed homes?" he says. "[Low-income renters] can't necessarily move to a vacant McMansion somewhere out in the suburbs."

Ms. Merrill says the lack of affordable rental units is a huge problem in her area of Massachusetts. "People are applying now for public and subsidized housing," she says, but the waiting lists are long and the alternatives are bleak. Even if Ms. Merrill can find her twice-evicted client another acceptable apartment, she says, "how does she know another place won't be foreclosed on too?"

Prngr44

Well this one hits right at home in the G|A community doesn't it??

chrissy

Scary. Donnie and I have talked about renting off base because we don't want to move into the new housing being built (they will white glove it when we leave and we will have to pay for tiny things just because we are first in. With two dogs and a toddler, there is no way carpet will be new when we leave and there is no way we are getting rid of the toddler )

And I have seen this happening here over the past couple years. A lot of apts. became condos. I know a couple neighborhoods that you can drive through and just about every other house has a for sale sign in the front yard. Just recently, there were two apt complexes in the news for this very reason and a few of the tenents had only been there a month after their last one did the same thing.

It's scary.

InfiniteNothing

How long have you been in the place. If you've been there a while you can claim "normal wear and tear" and might not have to pay much at all.

__________________
As for our common defense, we reject as false the choice between our safety and our ideals.

chrissy

Off base, sure. But not in base houseing. If you are the first people to move into a brand new house, you will be screwed. There isn't a way around it. Once they get to be as old as these are - built with cinderblocks, lead paint, and asbestos- you can use that excuse.