Foreclosure Crisis Catching Renters Off Guard

"We kept thinking that as long as we paid him the rent, we would be all right," says LaToya Hall, who is six months pregnant and now lives in a homeless shelter in Manassas. At right is shelter director Matt Burrell. (By Gerald Martineau -- The Washington Post)
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"But a lot of renters don't know that," Becker said. "They get a notice in the mail, usually addressed to the owner, saying they have to move out within 30 days, and they just pack up and leave."

The Office of the Tenant Advocate, an independent city agency, now receives 10 to 12 calls a week from panicked renters, said Lennie Mitchell, the agency's spokesman. Next week, the agency plans to post a form on its Web site that tenants can send to the banks informing them of D.C. laws. It plans to follow up with a marketing blitz that includes public-service TV ads.

Virginia and Maryland laws are less renter-friendly, basically leaving tenants at the mercy of the new owners once a foreclosure is final.

In Virginia, that can take up to two months as the lenders and courts deal with paperwork, said Kristi Cahoon, a lawyer at Legal Services of Northern Virginia. Until then, tenants often live rent-free.

"We advise clients to save money during that time for a security deposit and first month's rent while they look for another place to live," Cahoon said. If the lender is pressing the tenants to leave, renters could consider a "cash for keys" arrangement, in which the bank pays the renters to move.

There are laws protecting deposits, but not all landlords follow them. Tenants could sue for damages, but that only helps if the landlord has money.

LaToya Hall knew none of this when she and her cousin left the Manassas townhouse they rented.

Earlier this summer, the two received a mailed notice, addressed to their landlord, with the word "foreclosure" stamped on it in red letters. They called the landlord repeatedly but he did not respond. "Still, we kept thinking that as long as we paid him the rent, we would be all right," said Hall, 25.

She was not alarmed until two weeks later, when a sheriff tacked an eviction notice on their door. Three weeks later, she and her cousin lost hope that they would get their $1,200 deposit back.

They left. The two parted ways.

Without her cousin, Hall had no reliable ride to work, and she lost her job as a hair stylist. Without her deposit money, she could not afford to rent again. Her options ran out.

She now lives in a homeless shelter in Manassas. She is nearly six months pregnant, and she's searching for a job.

Because of cases like Hall's, 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 Monday, tenants in foreclosed-on homes 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.

That's as good as it gets for tenants in Maryland, said Kathleen S. Skullney, a foreclosure lawyer at the Legal Aid Bureau in Baltimore. In limited circumstances, a lease may survive a foreclosure, but otherwise, the new owners are not obligated to contact renters in advance. Many limit their efforts to dealing with borrowers and courts.

Once the foreclosure is approved and eviction is legally allowed, the renter may have to leave on the spot.

"The renter has no defense at that point," Skullney said. "If there ever was an overlooked and uncontemplated consequence of the foreclosure crisis, this is it."

Having been through this twice, Austin understands that all too well. He's looking for another rental, and hopes he won't land up on the street first. He sent a letter to the lender that repossessed the Bowie house, asking to stay a while, he said. "I've gotten no response."