Renters caught in the housing bubble

August 20, 2008

Adam Turl describes the epidemic of renters who are being evicted as as a result of the mortgage crisis.

EVEN THOUGH it was hard, Patricia and Michael Phillips kept up on the monthly $600 rent. Both are disabled--Patricia can't use her right arm, and Michael is in a wheelchair--and both depend on Social Security payments for their limited income.

So they were shocked when the local sheriff's department turned up at their front door in July and told them they were to be evicted by the end of the day. Their landlord was being foreclosed on--and even though he hadn't been paying the mortgage for months, he had been cashing their rent checks.

Michael and Patricia phoned their adult children and their friends for help, hurriedly packed a lifetime's worth of personal belongings into a U-Haul, and moved into Patricia's 89-year-old father's mobile home.

The Phillips family isn't alone.

In Dayton, Ohio, Jimmy Jackson always paid his rent on time, but ended up homeless after his landlord's foreclosure.

In Springfield, Ohio, Debbie Sample--out of work because of an on-the-job injury--found out she was going to be evicted. She told local reporters she had no idea how she was going to get money together for a new apartment--as she was out of work and was also about to go to the hospital for surgery.

Some renters are finding themselves evicted without warning
Some renters are finding themselves evicted without warning

In Las Vegas, Tresia Chesley has been chased from three apartments in less than three years, as each successive landlord has been foreclosed upon.

In San Diego, the residents at a sober-living facility for recovering alcoholics found out they were going to be evicted and that their landlord had collected $30,000 in rent but hadn't made a single payment on the mortgage.

Aurea Ortiz got less than two weeks notice that Wells Fargo was evicting her from her $1,100-a-month two-bedroom Bridgeport, Conn., apartment.

In Henderson, Nev., constables entered a hospice and ordered everyone to vacate the premises in 24 hours--including the elderly patients attached to IV drips. Frantic health care workers arranged to move residents by ambulance, hire emergency medical care and find last-minute housing. The out of state landlord had failed to pay the mortgage or notify the hospice of the imminent eviction.

THE FORECLOSURE crisis isn't just impacting homeowners. Increasingly, renters find themselves put to the curb, discovering they are to be evicted with days' notice--if that. Banks and mortgage companies are foreclosing on large numbers of rental properties--and, according to the Illinois Mortgage Bankers Association, they do not want to become landlords, as these companies feel they will be able to sell small apartment buildings more quickly if they are empty.

Although no federal agency keeps track of the figures, if local estimates and statistics bear out nationwide, the number of renters who have faced eviction since the beginning of the housing crisis could number in the hundreds of thousands. David Rothstein of the nonprofit Policy Matters Ohio (PMO) notes that studies in Ohio have shown that renters are forced from homes in 30 percent of foreclosures, and that some studies put the number as high as 60 percent.

The crisis is an epidemic in Ohio. In Cuyahoga County alone, the PMO reports a 29 percent increase in foreclosures on rental properties from 2006 to 2007.

But it isn't just about hard-pressed Ohio. Analysts believe up to half of foreclosures in Nevada may be on apartments--because the address of the property doesn't match the address of the owner on court documents. According to the San Diego Union Tribune, in San Diego County--which has upwards of 50 foreclosures per day--one-third to two-thirds of foreclosures may be on rental properties.

In a recent article in the Chicago Reporter, journalist Kelly Virella argues that thousands of renters in the Chicago area have likely been evicted during the course of the current housing crisis, facing unexpected and often immediate evictions when a landlord's property is foreclosed.

As Virella aptly describes the situation, "Since the nation's worst housing foreclosure crisis began two years ago, the octopus-like tentacles of the global mortgage industry have orchestrated the repossession of thousands of small apartment buildings in Cook County, affecting thousands of renters who live there."

In 2006 and 2007, 3,551 two- to six-unit apartment buildings in Cook County were foreclosed on.

As with the broader crisis, Black neighborhoods face the brunt when it comes to renters. Two of every three foreclosed small apartment buildings, Virella reports, were in majority Black neighborhoods. Of 11 community areas studied with more than 100 small apartment building foreclosures in 2006 and 2007, all were on the predominantly minority South and West Sides of the city.

THE HARDSHIPS on renters go beyond the "hassle" of finding a new apartment. First of all, as the housing crisis drives former homeowners into rentals, some people are becoming multiple victims.

As the PMO's Rothstein told reporters, "A lot of these people, it is not the first foreclosure they face. A lot of families that we've seen had been foreclosed on the home they used to own and then became renters and now their landlord has been foreclosed upon."

While a few states require notifying renters of an impending foreclosure and eviction, most do not. Tenants often find out they must move when the sheriff appears at their door, creating an expensive scramble to find a new home, often with higher rent because of the short-notice.

Renters usually don't get their security deposits back, and they have often paid months of rent that the landlord has pocketed, even though he or she is no longer paying the mortgage. Many evicted tenants end up moving in with relatives or friends.

Landlords aren't just failing to pay their mortgages. The Chicago Metropolitan Tenants Organization (MTO) told the Chicago Reporter that they have seen a substantial spike in tenants' complaints about heat or gas being turned off after the landlord failed to pay the utilities.

Even where local laws prohibit evicting tenants, banks and mortgage companies try to bully renters into moving. Washington, D.C., prohibits evicting tenants for landlord foreclosure--but banks are known to send tenants "20-day notices" to vacate the property.

Renters dealing with these evictions find themselves tangled in a bewildering web of red tape.

Due to the deregulation of the housing market and financial system, many owners don't know who actually owns their mortgages, let alone renters. The bundling and selling of mortgages makes it increasingly hard for renters to find out just who is trying to put them on the street.

During evictions, mortgage companies and banks often contract out to other firms--usually law firms--that liaison with the local sheriff or constable to carry out the evictions.

Yet another company may be hired to physically haul a renter's belongings out of their home. For example, the Chicago Reporter recounts the story of Tabitha--a renter in Chicago's East Garfield Park neighborhood--who faced eviction from her brownstone apartment after her landlord failed to pay the mortgage.

Tabitha had to deal with the California-based Citi Residential Lending, her realtor's office--Jax Realtors and REO Group--the Cook County Sheriff, and yet another company that was hired to empty her apartment, all in a vain attempt to retrieve her belongings.

She arranged with her former realtor to move her things. After waiting for two hours with a small army of friends who had come to help her move, Jax failed to show up. Tabitha sought legal help from the non-profit Legal Assistance Foundation and arranged another appointment to move. Again, Jax didn't show up.

However, movers from another company did show up at her apartment, and began moving her things out to the street, damaging much of her property beyond repair or use.

Since the general housing crisis is far from over, it is likely that the evictions of renters will continue to rise, and such horror stories will accumulate. Already strapped for cash due to record inflation, lower-income workers who make up the bulk of renters are also among the first to be laid off during a recession.

Despite hard times, inflation and unemployment, most of these workers have managed to pay their rent month after month after month. It is absurd that they would be driven from their homes by the thousands.

It is criminal that the banks and mortgage companies--the people who created the housing crisis in the first place--are the ones doing it.

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