Foreclosure Net Catches Unwary Renters Caught

Posted in Foreclosure, May 29th, 2008 |

Stories are rolling in about unwary renters being caught in the foreclosure net. A septuagenarian man in Bridgeport returned home to his apartment to find he had been locked out. His landlord had been foreclosed upon and the unfortunate renter had become a pawn in the game. His attorney, Richard Tenebaum, commented that such incidents are regularly happening in and around Connecticut. During the past few the eviction numbers have nearly doubled, he added.

The debate is mainly about the plight of the single families. But till now hardly has anyone focused on the plight of the renters who are being victimized for no fault of theirs. A recent study shows that a third of the foreclosures in Connecticut, that is responsible for half the total numbers of actually foreclosed upon, are multifamily houses. Many of these are occupied by low-income families, whose landlords fell into the foreclosure trap.

From December 2006 to end of March 2008 there had been 2,295 foreclosures in Connecticut. The term ‘foreclosure’ covers all the different stages of this judicial procedure from default and auction notices to repossession by the lender. Of these 760 (33%) were multifamily houses according to a report of National Low Income Housing Coalition. Research director Danilo Pelletiere of NLIHC caustically remarked’ “It’s an ignored part of the foreclosure crisis”.

An increasing number of calls from ousted families last summer made NLIHC sit up and take a note of the foreclosure pattern all through New England. There were 34% multi-unit houses in foreclosure in Massachusetts. The rate was 41% in Rhode Island. New Hampshire being more rural had a lesser percentage of the same category – 12% of the foreclosures. Most of these houses accommodated as many four family units.

The tenants in large housing complexes face less risk of eviction from foreclosures, opined community development specialist, Michael Santoro of Department of Economic and Community Development in Hartford. For example in 60 unit complexes the new buyers do not want to dislodge anybody because in these cases cash is flowing in.

The tenants of a foreclosed unit are referred to as John or Jane Doe in the legal documents when proceedings start against a landlord having renters, clarified Tenebaum of Connecticut Legal Services. The Does usually forfeit their tenancy rights together with the exiting landlords. In brief renters are given no notice and have limited protection from the law