Foreclosures catch renters off-guard

Thousands of renters are getting caught up in the foreclosure crisis.

Washington Post

WASHINGTON — James Austin was stunned when a real estate agent showed up to snap photos of the house he was renting last year and casually informed him the place was in foreclosure.

Austin hastily found another house to rent in Bowie, Md. But soon after he and his three teenage children settled in, that house went into foreclosure, too.

“Twice, can you believe it?” said Austin, 38, a consultant for a home-security firm. “This last landlord, he didn’t even seem like the type who would do that to somebody. But what is the type?”

Thousands of unsuspecting renters who have been paying their rent on time are getting enmeshed in the foreclosure crisis that is plaguing the housing market.

In many cases, their landlords, often individual real estate investors, bought properties during the boom days, rented them out, then failed to keep up with their mortgages. The homes went into foreclosure, often unbeknownst to the tenants, who face disrupted lives and even homelessness.

Several localities around the country, as well as some members of Congress, are pushing to give renters more time before the new owners, usually banks, can evict them. Such a measure takes effect in Baltimore today and D.C. plans to launch television ads this month informing tenants of their rights.

“Early on, the focus was all on the homeowner’s problems,” said William C. Apgar, a senior fellow at Harvard University’s Joint Center for Housing Studies. “It’s only now that the renter’s dilemma is bubbling up to the top.”

Often, when a home is foreclosed on, lease agreements are dissolved. That means many renters can be forced to leave without much notice and typically without their deposits.

The Mortgage Bankers Association, which tracks foreclosures, does not know how many tenants have been uprooted this way. But one in five foreclosures initiated in the third quarter last year were not occupied by their owners, the group said. Some of those nearly 70,000 properties may have been vacation homes. Others may have been vacant. But a large chunk were probably rentals, and as the foreclosure rate has climbed this year, those numbers have likely climbed, too.

The U.S. House passed a measure last year that would require the new owner of a foreclosure to inform renters at least 90 days before an eviction. If there are more than 90 days left in the lease, the renter could stay for up to six months.

Some jurisdictions are finding their own remedies, including Baltimore. Starting today, tenants in foreclosed-on homes there must get at least 14 days’ notice — by certified mail and first-class mail — before eviction.

A week before the eviction, the sheriff’s office must post a written notice on the door. “It’s a good first step, but two weeks is not enough time to find a new place to live when the affordable rental market is tight,” said Sally Scott, co-chairman of the Baltimore Homeownership Preservation Coalition.