Foreclosure Epidemic Infecting Rental Market

Deborah Leggett, a former mortgage underwriter, said she asked about prospective landlords' mortgages while searching for a new rental. She eventually rented a place owned by a management company, not an individual. (By Lois Raimondo -- The Washington Post)
Buy Photo

Collecting money on a property you no longer own or signing a long-term lease on a property headed for foreclosure could lead to felony charges of obtaining money under false pretenses, authorities said.

"As opportunities arise, the scoundrels and the con men come out," said Doyle Niemann, an assistant state's attorney in Prince George's County. "A landlord who continues to collect money after [foreclosure] would be guilty of theft," he said.

But experts say tenants' rights are limited in the foreclosure process. Although laws in the District protect renters from eviction if they have a valid lease, tenants in Virginia and Maryland lack the right to remain in a repossessed home, attorneys said.

"There are no protections for tenants" in Virginia, said Kristi Cahoon, an attorney with Northern Virginia Legal Services in Fairfax County. In the commonwealth, as in Maryland, "a lease does not survive a foreclosure sale."

Furthermore, there is little recourse for tenants whose landlords stop paying the mortgage and don't tell them about it.

"The lease agreement is between the tenant and the landlord, and the tenant doesn't have any say with what the landlord does with that money," said Vee Johnson, an official with Fairfax County's Consumer Protection Branch.

Foreclosure agents acting on behalf of banks will try various strategies to persuade tenants to move out. Some involve cash incentives, but others are less-than-honest tactics verging on intimidation. "There are no rules in place, so a lot of things are being created on a day-to-day basis," Johnson said.

Centreville resident Leticia Willcockson said her 13-year-old daughter recently came home from school to find a foreclosure agent on the doorstep. The agent told the girl that her family had to move out and then asked the frightened teen for her key, Willcockson said.

Because Willcockson had paid the rent through the end of the year and could find no record that the home she was renting was in foreclosure, she refused to leave. Her landlord insists that the house is not in foreclosure, Willcockson said, but as the agent continues calling her, she has grown increasingly frightened and confused.

In one voice mail message, the agent tells Willcockson to leave the house or risk losing her belongings -- a threat with no legal basis.

"I don't want her to lock us out and take our stuff," said Willcockson, crying. "I've paid every dime I have toward our rent."

When asked about the behavior of his foreclosure agent, Avery Hess real estate executive David Hess said that the company would investigate Willcockson's case and that the company would not do anything illegal, such as seizing a tenant's property without proper notification. "There would be severe consequences for an illegal eviction," he said.