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Rental Foreclosures Stun Tenants

By THELMA GUTIERREZ and WAYNE DRASH,
CNN
Posted: 2008-06-02 12:31:41
LAGUNA HILLS, Calif. (May 30) - Charles Nelson has paid about $30,000 in rent since moving into a spacious four-bedroom home in August. He was stunned when a real estate agent knocked on his door recently and said the home was in foreclosure.

His landlord had not paid the mortgage since he moved in and the bank is now demanding the house back. Nelson will also lose his $7,700 security deposit.

When he confronted the landlord, he says, he was given a terse response: "That's none of your business."

"I said, 'I beg your pardon. It is my business. I mean, is somebody going to knock at the door and throw me out -- throw my family out, or what?'" he said.

Nelson, the owner of PCH Auto Sales, lives in the upper-middle class enclave of Laguna Hills, south of Los Angeles, with his girlfriend and two sons from previous marriages.

More than 100 miles away in the working-class city of Palmdale, Fai Nomaaea -- a 35-year-old mother of eight -- can relate. The single mom was cleaning the yard when a man handed her a notice of foreclosure. Like Nelson, she had been paying her rent on time every month.

She now lives in fear every day.

"I don't know what's going to happen the next day," she said. "I don't know if they're going to come to the door and tell us that we have to move, and I don't have anywhere to go."

For Nomaaea, getting booted from the home presents another hardship: She lives on a fixed income and can afford about $1,200 a month in rent. It also means finding a new school for her children.

Her 10-year-old daughter, Jeaah, said she prays to God every night. "I ask Him, I hope I get new friends and they like me and stuff, and that I like them back," the girl said.

Stories like these are becoming more common, with renters becoming victims of the nation's mortgage meltdown through no fault of their own, experts say.

"We know it's a growing problem," said Rick Sharga, vice president of marketing for RealtyTrac, a company that tracks foreclosures across the country.

"It really is a frightening issue for tenants that have no way of knowing until almost the last minute that a landlord is defaulting on a property."

The number of households to receive foreclosure notices for the first quarter of 2008 was up 112 percent from the same time last year, according to RealtyTrac.

Sharga said that more than 38 percent of properties in foreclosure through the end of April were classified as "not-owner occupied," meaning they were second homes, investment homes or rental property. That's roughly 280,000 of the nation's 720,000 foreclosed properties.

The hardest-hit areas are California, Arizona, Nevada and Florida.

"What you had was dramatically overheated markets where people overextended themselves to buy overvalued properties and they used risky loans to get those properties," Sharga said.

Foreclosure laws are governed state by state, and there is not much renters can do when their landlords get foreclosed on. There is no guarantee of being allowed to stay in the homes or ways to get their security deposits back.

"There is very little in the way of protections for tenants," said Nadine Cohen, an attorney for Greater Boston Legal Services, which represents low-income people in Boston. "Many times, the tenants don't even know their buildings are being foreclosed."

Cohen said some states in the Northeast have begun introducing legislation to protect renters from being evicted. A U.S. congressional bill that would have addressed the issue has been held up in conference committee.

"People who are continuing to pay their rent are really victims of this mortgage foreclosure crisis and need to be protected. They haven't done anything wrong. They've lived up to the tenets of their lease; they paid their rent," said John Taylor, president and CEO of National Community Reinvestment Coalition, which works to promote access to basic banking services.

"It simply smacks against all that is fair in our democratic society for people who have no control over bad decisions of other people, but ... they're impacted by this."

Sharga said that in many cases, renters want to buy the properties being foreclosed, but the banks force them out anyway.

"It boggles the mind. ... We're dealing with laws and regulations that really weren't made with this kind of situation in mind," he said.

Nelson knows all about that. He called the bank to offer to buy the home he's renting but was told that he has to move out first and then make a bid. Now, he lives day-to-day, not knowing when he'll have to leave.

"There could be a knock on the door, saying we have 10 days, two weeks. I don't know."

2008-05-30 11:41:34
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Seventeencats 12:47:58 AM Jun 03 2008

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LDan1127 WROTE: You all can sit there and say bad things about these poor people trying to keep a roof over their heads, when the next knock on the door comes and they have no where to live and have invested all this money and time in their homes, IT COULD BE YOU..... God bless these people and don't let them lose their homes....How awful I feel so bad for these people....lliving on a fixed income and trying to make ends meet that never do meet is not a joyful thing.....so keep your ugly words to yourselves it could be you...... THE PEOPLE WERE RENTERS, NOT THE ONES THAT OWN THE HOUSE. YOU TAKE A BIG CHANCE WHEN YOU RENT AND THEY SHOULD KNOW THIS. ALWAYS HAVE A BACKUP PLAN WHEN YOU RENT, ANOTHER PLACE TO RENT, AND IF NOT, WELL, THAT'S THEIR TOUGH LUCK. CRAP HAPPENS, GET USED TO IT.

Seventeencats 12:43:16 AM Jun 03 2008

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you rent, it's like gambling...nothing more, nothing less. the owner of the property owes the renter's nothing when they have the place taken by the bank. when the takes it, it also owes the renter's nothing. there's no contract between a bank and the renters and no bank will ever have one. i worked in banking, bank's ain't stupid. sooo, you trusted you landlord and got yer butt bit. well, i suggest you start looking for a new place right now 'cause yes, the bank and police will make you vacate. bank has to resell house to help overcome losses and new owner may want to live in the house. lady with 8 kids, i have no pity for, she had way too many kids. that's disgusting if no money to raise 'em

LDan1127 12:24:21 AM Jun 03 2008

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You all can sit there and say bad things about these poor people trying to keep a roof over their heads, when the next knock on the door comes and they have no where to live and have invested all this money and time in their homes, IT COULD BE YOU..... God bless these people and don't let them lose their homes....How awful I feel so bad for these people....lliving on a fixed income and trying to make ends meet that never do meet is not a joyful thing.....so keep your ugly words to yourselves it could be you......

KELLIECOLEMANN 11:52:17 PM Jun 02 2008

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JOHN DAVID DM:

WOULD YOU KINDLY KNOCK IT OFF WITH THE CHURCH AND JESUS BAD MOUTHING AND MAKINIG RUDE, ILL COMMENTS TO JUST ABOUT EVERYONE WITH THEIR RIGHT TO SPEAK AND GIVE THEIR OPINION!!

IN OTHER WORDS, SHUT THE HELL UP!!!!! PLEASE.

JAMSMI174 11:03:59 PM Jun 02 2008

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its amazing that everything that happens in the USA is ole Georges fault .....
I promiise ya ... in about 5 years ... the People of America will be puttin this stuff on ... whos next.....if no one likes the guy ... why dont America just rise up and take our pitch forks and a torch and go to DC and throw them all out ......
but .... who ya gonna get then ???... just remember Jimmy Carter was the the worst prez. that America EVER had .....Prime Rate went to 18.5 %...whaT ... 18.5 ?
Hell .. ole George has the Prime rate at less than 6 %...ya want another socilist
for Prez ??.......the unemployment is 5 % .. take a shot at what Carters was ...
and you still want to put in a Socilalist Government here ...???.. what is it with all you Stupid White people out there that want Obama......hell we just got a guy named Hussain hung .. and now you want one in DC..

JAMSMI174 10:52:20 PM Jun 02 2008

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Waaaaaaaaaa Waaaaaaaaaa Waaaaaaaaaaa

Sand9A 09:00:34 PM Jun 02 2008

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not sure what the law is there, but here security deposits are to be placed in escrow,with interest. they should be allowed to pay the bank and/or form a co-op

Billyjoe777 08:43:29 PM Jun 02 2008

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NOW HEAR THIS!!!!!!!! BEEN THERE DONE THAT, TWICE HAD HOUSING TAKEN OUT FOM UNDER US, THE LAST TIME IT MADE US HOMELESS, SHAMEFULL

FrankMaston56 08:14:05 PM Jun 02 2008

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Reganomics has findly reared its` ugly head.

MetPlum 08:09:35 PM Jun 02 2008

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To PCfriar:
I know, but I like to bit ch a bit about it in hopes that maybe AOL might one day stop doing it. Of course that 'hope' that I have is proof that I do hallucinogenic drugs.

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