More and more renters nationwide are being evicted and displaced, not because of anything they have done wrong, but because of their landlords’ financial woes.
And when landlords lose buildings to foreclosure, their tenants don’t just lose a place to live.
They also can lose months of rent and their security deposits. They can lose their good credit scores if banks mistakenly list them as defendants in foreclosure cases. And in Chicago's tight rental market, they can lose the roof over their heads, because finding a new apartment often takes longer than the time tenants are given to move out.
Renters have become the collateral damage of the foreclosure crisis.
Others are overwhelmed, too. Banks are now serving as landlords though most appear ill-equipped for the job. Sheriff’s deputies are evicting more and more people, many of them renters. Counselors are swamped with calls from renters begging for help.
"Unfortunately there aren't a lot of protections and there aren't a lot of regulations," said Andrea Button, an attorney with the Legal Assistance Foundation of Metropolitan Chicago, a free legal aid clinic that provides assistance to low-income Chicagoans. "Only recently has this become such a huge problem."
Last year, multi-unit buildings of six units or less accounted for about 35 percent of foreclosures filed against residences in Chicago, according to a study by the Woodstock Institute, a nonprofit policy-research group.
That translates to about 4,800 buildings and as many as 28,800 families, depending on the number of apartments in each building and how many of them were occupied.
That number does not include single-family homes inhabited by renters, common in many Chicago neighborhoods but harder to track because they are classified the same as owner-occupied single-family homes.
Renters have rights when faced with this type of eviction: Tenants on a month-to-month lease have only 30 days to move out after learning of the foreclosure, though recent state legislation allows tenants who had a lease and are current on their rent 120 days to find a new home.
These evicted renters also have help: Community organizations, legal aid groups, government agencies and banks have become attuned to the problem and have started providing counselors, attorneys and even cash to aid evicted renters.
Still, the recent surge in renters evicted because of foreclosure has left counselors struggling to catch up.
Landlords: A vanishing act
South Side renter Belinda White--not her real name--knows this nightmare all too well.
One morning in early July, she received a notice giving her and her 7-year-old daughter less than six weeks to vacate the home in the Pullman neighborhood where they've lived since 2003. White's landlord had lost the house to foreclosure.
According to court records, the landlord fell behind on her payments in early 2006 and was in court in June that year.
But White said she did not know about her landlord's financial problems until after the foreclosure was finalized this July. She said the landlord renewed her lease twice, most recently in January, and had continued to collect rent each month.
"She was just coming over and collecting my rent money like nothing's happening," White said. "She never mentioned nothing to me."
But the landlord was not legally required to inform White of the foreclosure, and according to advocacy groups, many hide foreclosures from tenants and keep collecting rent after they have stopped paying their mortgages.
"There's every reason to hide it and lie about it so they [landlords] can keep getting rent," said Michael vanZalingen, director of homeownership services for Neighborhood Housing Services of Chicago.
Some landlords fraudulently collect rent after they no longer own the building. Then, once foreclosure is final, they often disappear, taking with them security deposits and months of rent.
Tenants can sue, but after foreclosure many landlords are bankrupt, so often there is no money to collect.
"It's difficult because the renter is going to have a hard time getting any of that money back that they've been paying for that rent," said Jasmine Brewer, director of housing counseling with Interfaith Housing Center of the Northern Suburbs.
"The problem is finding legal representation," Brewer said. "We're talking typically low- to moderate-income households."
Lawsuits are too expensive for many evicted tenants, Brewer said. The average yearly income of Interfaith's clientele is around $40,000 for a family of four, Brewer said, compared to about $70,000 for Cook County. These families often live paycheck to paycheck and many cannot afford to hire a lawyer.
Most of the tenants Brewer counsels live in Evanston and Skokie, but evicted tenants in Chicago experience the same problems.
"Tenants who call are pretty low income," said Rebecca McDannald, who supervises the Metropolitan Tenants Organization's hot line and works mostly with Chicago renters. "They're calling in stress mode -- 'How long do I have to stay here? What do I need to do to get out?'"
For these tenants, a lost security deposit can mean no money to put down on a new apartment.
White went through this when she tried to get back her security deposit. After learning about the foreclosure, she called her landlord to ask about the deposit. According to White, she was told she would not get the money back. Instead, the $1,000 would go toward her July rent, White said.
Yet the landlord actually had lost the property days earlier, on July 2, so White did not owe her the rent for that month.
The landlord declined to be interviewed for this article.
Also, White is a Section 8 voucher recipient, so her rent was subsidized by the federal government. According to Derek Hill, a spokesman for the Chicago Housing Authority, Section 8 does not subsidize security deposits: White's security deposit belonged to White, and her landlord could not have used it as rent even if she had still owned the house.
White still hopes to recover her security deposit. According to White, security deposits have increased since she last moved -- many landlords she has called have asked for $2,000 or even $3,000.
"I might have to cut back on a lot of things," White said, referring to the costs of being evicted. "As long as she eats," she said, motioning to her daughter.
Section 8 tenants, time is money
For Section 8 recipients, moving also takes time -- more time than it would for a non-subsidized renter.
Section 8 renters must inform the Chicago Housing Authority they plan to move. Then they have to obtain moving papers, find a landlord willing to accept Section 8 vouchers and wait for the CHA to inspect the property.
All of Button’s clients at the Legal Assistance Foundation are Section 8 voucher holders, and she advises them to get their moving papers as soon as possible. According to her, her clients need all the time allowed by the law to find a new home.
According to Hill, Section 8 tenants are no more likely than other renters to experience eviction due to foreclosure. For all renters impacted by foreclosure, he says, eviction is devastating.
“Think about that: Surprise! Some landlord has just changed your life,” he said. “That’s traumatic.”
Section 8 landlords wait until foreclosure is final to tell tenants they have to move. Housing officials wonder what landlords do with their federal dollars if they weren’t using them to pay their mortgage bills.
“We have seen some instances where landlords have been collecting their federal dollars and not informing their tenant,” Hill said.
"They’re trying to get that last month’s rent before the government comes and takes it [the house],” he added.
Banks: The accidental landlords
Others worry the new landlords are no improvement.
In the failing real-estate market, where foreclosed properties far outnumber people willing to buy them, many rental buildings are being repossessed by banks.
When banks become landlords they must take care of the properties they own -- cutting the grass, paying the utility bills and making repairs.
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However, banks are often unprepared to carry out their duties to tenants. Renters complain of utility outages and wonder to whom they should pay the rent.
"Banks don't like to act as landlords, and yet they are," McDannald said.
Usually banks evict tenants as soon as possible so they can sell the property and be rid of the responsibility. They could keep tenants around while selling the building, but most choose not to.
Even though occupied properties could be worth more than vacant buildings, most banks show little interest in keeping good tenants around.
"They own these properties, but they don't really want to invest," said Geoff Smith, vice president of the Woodstock Institute and author of several reports on foreclosure.
The number of small, multi-unit buildings repossessed by banks has increased fivefold in recent years, according to Smith's research. In 2005 banks took back less than 500 such properties in Cook County; last year they took more than 2,400.
Two- to six-unit buildings account for more than one-third of bank-foreclosed properties.
Often banks that foreclose buildings don’t even know if the properties are occupied by renters.
Many hire real estate agents to visit the properties and find out. If a building is vacant, the agent changes the locks and boards up the windows. If a building is inhabited, the agent talks to the tenants and tells them they have to find a new home.
"No matter what the terms of a lease are, once the foreclosure is completed that lease is sort of torn up in the eyes of the law, and they have no lease," said Arthur Cirignani, president of Chicago Realty Partners, a real estate firm that deals mostly with foreclosed properties.
Most of the banks Chicago Realty represents offer tenants money to move out quickly. The average for CRP's clients is about $1,000 to move within four weeks.
This method, called cash for keys, has caught on among big banks. Bank of America, which recently purchased subprime-mortgage giant Countrywide, now offers tenants $2,000 to move within 30 days.
Cirignani estimates three-fourths of the tenants CRP deals with take cash for keys.
The rest could face eviction.
"At some point in time they're going to have to move out," Cirignani said. "Do you move voluntarily under your own power or do you risk someday at eight in the morning the sheriff knocking on your door and putting you out on the street?"
To legally evict a tenant, a building's owner must get a court order approving the eviction. Then a deputy from the Cook County Sheriff's Office pays the tenant a visit.
Many tenants have been forewarned. But sometimes banks obtain eviction orders without finding out if people are living in the building.
"In most cases [that the Legal Assistance Foundation takes], the bank hasn't made any effort to see if there are tenants in buildings," said Andrea Button, the Legal Assistance Foundation lawyer. "The sheriff just shows up."
Some tenants have complained that the sheriff’s deputies mistreat them.
When White attempted to contact the sheriff’s department to ask them for more time to move, she claimed that she was treated very rudely by a deputy over the phone.
“Got the sheriff’s department mad at me, tell me she don’t care who I am,” White said. “‘We took your landlord to court and we can throw you out anytime.’”
In the worst cases, tenants are rendered homeless within minutes. Some have even come home to find the locks have been changed. Their keys no longer work, and their furniture and clothes and sometimes even their credit cards are locked inside.
According to Steve Patterson, a spokesman for the sheriff’s office, the department is inundated with eviction orders, averaging 125 per day, and deputies don’t have the time or manpower to find out who they are evicting.
“It’s a horrible thing,” Patterson said of evictions. “But in reality our officers are simply carrying out a court order. That’s it; we don’t know anything else.”
Moving out, moving on
White said she fears she will run out of time and come home to find the sheriff at her door. She is searching daily for a new home, but everything she has found is either too expensive or already taken.
“Every time when you call these apartments in the paper, they say you’re the fourth, fifth person that called that’s going through foreclosure,” White said, holding up a detailed list of apartments she had looked at. “That’s when I really got scared.”
White is looking for anything in her price range and isn’t too concerned about location. Her daughter will likely have to change schools, and White will be sad to leave her tree-lined street and the friends she’s made in her block club.
“I liked it, I ain’t never complained,” White said of the house.
Until moving in five years ago, White had only lived in apartments -- this was her first house, and she cherishes the time she spent there.
“It’s like a little girl getting her first baby doll,” she said. “You’re happy.”