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Thought the IHB community might find the article below useful.
Renters left hanging after foreclosures
By Sue McAllister
Mercury News
San Jose Mercury News
Article Launched:09/28/2007 01:37:48 AM PDT
<strong>Setting the record straight </strong> (Publ. 10/02/07)
<em> An article about what happens to renters in foreclosure situations incorrectly described who can start eviction proceedings if a tenant stops paying rent and fails to vacate or resume paying within a three-day period. It is the landlord, not the renter. </em> <hr />
Several months ago, Eugene Wright found a foreclosure notice posted on the door of the three-bedroom South San Jose house he and his family had been renting since January. He called his landlord, who told him not to be concerned. It wasn't until a real estate agent showed up in July to tell him that a bank had repossessed the house that he realized he had to move.
<p> "He was saying 'Don't worry about it, just keep paying the rent,' " Wright said, referring to the landlord.</p>
<p> With foreclosures at near-record levels in Silicon Valley and elsewhere, Wright is one of many tenants who this year will find themselves suddenly scrambling to find new rentals because their landlords lost their properties to foreclosure. In nearly all cases, renters of residential houses, condos or duplexes must vacate a property after it's been foreclosed upon and a new owner - be it a bank or an individual - takes possession.</p>
<p> Nearly 9,500 California properties were sold in foreclosure auctions in August, according to <a href="http://foreclosureradar.com/">ForeclosureRadar.com</a>. Of those, 44 percent were not owner-occupied, the company said. </p>
<p> Tenants seldom hear about the foreclosure of their rental directly from the landlord, who is not legally obligated to tell tenants about the situation. Like Wright, many renters don't know the whole story until they're being informed by a bank's agent that they need to move in 30 days or face eviction. </p>
<p> JoAnn Guercio, an agent with Intero Real Estate, delivered the news to Wright, 58, who moved from the foreclosed property into a mobile home park in South San Jose in August. Guercio has listed bank-owned foreclosure properties during this and previous market downturns. She said she has seen cases where landlords rented property to new tenants just before the home's foreclosure auction date, collecting a deposit and rent "knowing that the house would be gone in two weeks," she said. "It's unbelievable what people do, unbelievable."</p>
<p> In most cases, once a property has been foreclosed upon and the ownership changes, tenants' leases are wiped out, and they must vacate within 30 days (60 days if they've lived in the property more than one year). Tenants in San Jose rent-controlled units would get 90 or 120 days, depending on how tight the rental market is. Another exception is in rent-controlled units in cities with "just cause" eviction laws that do not list foreclosure as one of the causes for eviction, such as Berkeley, East Palo Alto, Hayward, Oakland and San Francisco. Another exception is when a tenant signed the lease <em>before </em>the owner took out any mortgage on the property, said Myron Moskovitz, a professor at Golden Gate University School of Law who specializes in property law.</p>
<p> But in most cases, he said, "If the landlord is in trouble, and if it's just a month-to-month tenancy, the tenant has no particular rights" to keep renting the property from a new owner.</p>
<p> Sharleen Kilgore of Project Sentinel, a Bay Area landlord-tenant dispute resolution and foreclosure-prevention counseling service,<em> </em>said the group has worked with a few renters in foreclosure properties this year. These are some of the problems such tenants typically face:</p>
<p> • They very seldom have the right to maintain their lease. </p>
<p> • They usually lose their security deposit, even though the landlord is required by law to return it within 21 days of when tenants move out. The landlord probably used the deposit money "to try to make a mortgage payment," Kilgore said. Suing the landlord for the deposit may be the only recourse.</p>
<p> • They have to seek replacement housing in a tightening rental market.</p>
<p> • They are often bothered by visits from people who want to buy the house and/or save the owner from foreclosure, some of whom may be scam artists.</p>
<p> • Tenants in long-term leases typically are obligated by the terms of their contracts to keep paying their rent until the date of the foreclosure auction.</p>
<p> In effect, Kilgore said, tenants with long-term leases who find out about their landlord's foreclosure "can't move, they can't even look for another property because those aren't going to stay open for four months," which is about how long it takes from the time a lender sends a "notice of default" to a borrower to the auction date.</p>
<p> Kilgore had tenant clients earlier this year who even contacted the landlord's mortgage holder to see if they could stay in the foreclosed property and rent it from the bank until a new buyer came along. The tenants were unsuccessful. Banks are not prepared to be landlords, and typically want their foreclosure properties - known in the industry as REOs, for "real estate owned" - vacated as soon as possible.</p>
<p> In Wright's case, in exchange for moving out of his rental quickly he got $2,000 in a "cash-for-keys" payment from Countrywide, the lender who had held his landlord's mortgage. Wright quit his longtime job at a storm-drain and street-cleaning company last year to help care for his disabled adult son, who got a kidney and pancreas transplant a few months before the foreclosure occurred. Having to move out of a house he<em> </em>had spent his own money painting and fixing was a disappointment and a hassle during an already stressful time. But he said he's glad he got out quickly without facing eviction or further inconvenience: "I accept it, and do what I can do. I'm not going to have a heart<strong> </strong>attack about it."</p>
<p> <em> </em>Many tenants don't know that lenders newly in possession of foreclosure properties will typically offer "cash-for-keys" payments of $1,000 or more to tenants who agree to vacate in about two weeks and leave the property clean, said Sean O'Toole, founder of <a href="http://foreclosureradar.com/">ForeclosureRadar.com</a>. The payments save lenders the time and expense of evictions, and also some cleaning costs. Tenants still have the right to recover their deposits from their former landlords.</p>
<p> Some might suggest that tenants whose landlords are in foreclosure could stop paying their rent, especially if they suspect they won't get their deposit back. This is unwise, said Kilgore of Project Sentinel, because landlords by law can require tenants to either pay up or vacate in three days if they've stopped paying rent. If they fail to do either, the landlord can start eviction proceedings. An eviction stays on one's credit report for up to 10 years, and can make it very hard to rent a new place.</p>
<p> Those who stop paying rent during a foreclosure, she said, are "gambling that the landlord won't go to court to get the rent."</p>
Renters left hanging after foreclosures
By Sue McAllister
Mercury News
San Jose Mercury News
Article Launched:09/28/2007 01:37:48 AM PDT
<strong>Setting the record straight </strong> (Publ. 10/02/07)
<em> An article about what happens to renters in foreclosure situations incorrectly described who can start eviction proceedings if a tenant stops paying rent and fails to vacate or resume paying within a three-day period. It is the landlord, not the renter. </em> <hr />
Several months ago, Eugene Wright found a foreclosure notice posted on the door of the three-bedroom South San Jose house he and his family had been renting since January. He called his landlord, who told him not to be concerned. It wasn't until a real estate agent showed up in July to tell him that a bank had repossessed the house that he realized he had to move.
<p> "He was saying 'Don't worry about it, just keep paying the rent,' " Wright said, referring to the landlord.</p>
<p> With foreclosures at near-record levels in Silicon Valley and elsewhere, Wright is one of many tenants who this year will find themselves suddenly scrambling to find new rentals because their landlords lost their properties to foreclosure. In nearly all cases, renters of residential houses, condos or duplexes must vacate a property after it's been foreclosed upon and a new owner - be it a bank or an individual - takes possession.</p>
<p> Nearly 9,500 California properties were sold in foreclosure auctions in August, according to <a href="http://foreclosureradar.com/">ForeclosureRadar.com</a>. Of those, 44 percent were not owner-occupied, the company said. </p>
<p> Tenants seldom hear about the foreclosure of their rental directly from the landlord, who is not legally obligated to tell tenants about the situation. Like Wright, many renters don't know the whole story until they're being informed by a bank's agent that they need to move in 30 days or face eviction. </p>
<p> JoAnn Guercio, an agent with Intero Real Estate, delivered the news to Wright, 58, who moved from the foreclosed property into a mobile home park in South San Jose in August. Guercio has listed bank-owned foreclosure properties during this and previous market downturns. She said she has seen cases where landlords rented property to new tenants just before the home's foreclosure auction date, collecting a deposit and rent "knowing that the house would be gone in two weeks," she said. "It's unbelievable what people do, unbelievable."</p>
<p> In most cases, once a property has been foreclosed upon and the ownership changes, tenants' leases are wiped out, and they must vacate within 30 days (60 days if they've lived in the property more than one year). Tenants in San Jose rent-controlled units would get 90 or 120 days, depending on how tight the rental market is. Another exception is in rent-controlled units in cities with "just cause" eviction laws that do not list foreclosure as one of the causes for eviction, such as Berkeley, East Palo Alto, Hayward, Oakland and San Francisco. Another exception is when a tenant signed the lease <em>before </em>the owner took out any mortgage on the property, said Myron Moskovitz, a professor at Golden Gate University School of Law who specializes in property law.</p>
<p> But in most cases, he said, "If the landlord is in trouble, and if it's just a month-to-month tenancy, the tenant has no particular rights" to keep renting the property from a new owner.</p>
<p> Sharleen Kilgore of Project Sentinel, a Bay Area landlord-tenant dispute resolution and foreclosure-prevention counseling service,<em> </em>said the group has worked with a few renters in foreclosure properties this year. These are some of the problems such tenants typically face:</p>
<p> • They very seldom have the right to maintain their lease. </p>
<p> • They usually lose their security deposit, even though the landlord is required by law to return it within 21 days of when tenants move out. The landlord probably used the deposit money "to try to make a mortgage payment," Kilgore said. Suing the landlord for the deposit may be the only recourse.</p>
<p> • They have to seek replacement housing in a tightening rental market.</p>
<p> • They are often bothered by visits from people who want to buy the house and/or save the owner from foreclosure, some of whom may be scam artists.</p>
<p> • Tenants in long-term leases typically are obligated by the terms of their contracts to keep paying their rent until the date of the foreclosure auction.</p>
<p> In effect, Kilgore said, tenants with long-term leases who find out about their landlord's foreclosure "can't move, they can't even look for another property because those aren't going to stay open for four months," which is about how long it takes from the time a lender sends a "notice of default" to a borrower to the auction date.</p>
<p> Kilgore had tenant clients earlier this year who even contacted the landlord's mortgage holder to see if they could stay in the foreclosed property and rent it from the bank until a new buyer came along. The tenants were unsuccessful. Banks are not prepared to be landlords, and typically want their foreclosure properties - known in the industry as REOs, for "real estate owned" - vacated as soon as possible.</p>
<p> In Wright's case, in exchange for moving out of his rental quickly he got $2,000 in a "cash-for-keys" payment from Countrywide, the lender who had held his landlord's mortgage. Wright quit his longtime job at a storm-drain and street-cleaning company last year to help care for his disabled adult son, who got a kidney and pancreas transplant a few months before the foreclosure occurred. Having to move out of a house he<em> </em>had spent his own money painting and fixing was a disappointment and a hassle during an already stressful time. But he said he's glad he got out quickly without facing eviction or further inconvenience: "I accept it, and do what I can do. I'm not going to have a heart<strong> </strong>attack about it."</p>
<p> <em> </em>Many tenants don't know that lenders newly in possession of foreclosure properties will typically offer "cash-for-keys" payments of $1,000 or more to tenants who agree to vacate in about two weeks and leave the property clean, said Sean O'Toole, founder of <a href="http://foreclosureradar.com/">ForeclosureRadar.com</a>. The payments save lenders the time and expense of evictions, and also some cleaning costs. Tenants still have the right to recover their deposits from their former landlords.</p>
<p> Some might suggest that tenants whose landlords are in foreclosure could stop paying their rent, especially if they suspect they won't get their deposit back. This is unwise, said Kilgore of Project Sentinel, because landlords by law can require tenants to either pay up or vacate in three days if they've stopped paying rent. If they fail to do either, the landlord can start eviction proceedings. An eviction stays on one's credit report for up to 10 years, and can make it very hard to rent a new place.</p>
<p> Those who stop paying rent during a foreclosure, she said, are "gambling that the landlord won't go to court to get the rent."</p>
