Foreclosure Epidemic Infecting Rental Market
Tuesday, December 9, 2008
Of all the things that can go wrong on moving day, few could be worse than arriving at your new home to find another family already living there. Then again, in today's Darwinian housing market, worse things do indeed occur.
Like when a devious foreclosure agent tried to trick a Fairfax County teenager into handing over her family's house keys. Or when a "landlord" collecting security deposits and rent turned out to be an impostor with no legal claim to the property whatsoever.
In the past 18 months, the foreclosure debacle has pushed tens of thousands of area residents into the rental market, many with crippled credit and a desperate need for housing. Waiting for them is a new cast of swindlers, cheats and real estate sharks ready to prey on the weak and needy. Scams of various stripes are thriving in the foreclosure mess and flourishing at the margins of landlord-tenant laws.
Rental scams have generally been more of an urban problem, but the high incidence of foreclosure in the Washington region's suburbs and the relative lack of tenants' rights organizations there have helped create areas of vulnerability in such places as Prince William County. Opportunities are rife: The county and the adjacent cities of Manassas and Manassas Park have tallied 7,672 foreclosures this year through November, according to court records, up from 3,344 in 2007 and 282 the year before.
Many of those homes are bank-owned and vacant, and investors have been buying them at deep discounts and converting them into rental properties. But houses that remain vacant present some of the ripest targets for fraud, officials said.
Some of the schemes are astoundingly brazen. In July, Fairfax County police arrested Fauquier County resident Richard Hiner and accused him of breaking into empty, bank-owned homes, changing the locks and posting them as rentals on Craigslist. He accepted payment on nine properties, police said, including one he "rented" to two families that tried to move in on the same day.
When he was caught, Hiner still had the real estate signs from the homes in the back of his truck, police said. Evidence indicated that he was working for a larger, out-of-state criminal enterprise, but the trail went cold after police traced Web records to Africa, Seattle and elsewhere.
Hiner, 31, has been convicted of three felony counts of obtaining money under false pretenses. Sentencing is scheduled for Dec. 19.
"If you go on Craigslist, you can pick out the scams," said Lt. Michael Proffitt of the Fairfax County police. "If you look at one that says, 'No credit checks,' that's a clue. Or a price that's a lot lower than others in the area. Or multiple ads with the same phone number, and when you call, the person is in New York or Maine or Puerto Rico."
Most scams are less audacious. The most common involve landlords who collect rent but fail to pay the mortgage, leaving a rude surprise for the tenant when the sheriff shows up with eviction orders. Because it can take months for banks to initiate the eviction process, some landlords are cashing rent checks well after they have lost legal possession of the property.
"The owner asked us to pay October rent even though she lost the house in September," said Silvana Cuello, a Uruguayan immigrant and mother of three whose husband, a construction worker, is out of work and recovering from knee surgery. In October, a property management crew from the bank showed up at the family's house in Clifton, expecting it to be vacant, and now Cuello is working with a lawyer to delay eviction until she can find a place nearby so her children won't have to change schools.
"We've lived here for four years," she said.