Foreclosure Report Issued by Policy Matters

Renters Innocent Victim in Foreclosure Crisis

(Photo by Grapevine Photography Project Artist, Cheryl Jones--prints of any of the photo class graduates are available through NEOCH.)

Policy Matters Ohio released a report on the impact of the foreclosures on renters in Cuyahoga County in June 2008. Zach Schiller, staff for Policy Matters Ohio, presented the report to the members of the Affordable Housing Alliance at the July 2008 meeting. Schiller reported that the cost of a move out for a family is $2,500 including the loss of security deposit with a foreclosure, and the loss of property during a sudden move out after foreclosure. The Collateral Damage report mentions both state (HB 440) and similar federal legislation that if enacted could protect tenants. There was a long discussion at CAHA about why the courts were not working in a more concerted effort to protect tenants from foreclosure. It is also a tough action for a lawyer to take since each tenant must make their own decisions about the best course of action while their owner is going through foreclosure. A lot of questions arise when a tenant finds out their landlord is in the struggling. Should they pay the rent? Do they risk having an eviction on their record? Should they begin the process of moving or wait until the bitter end when the new owner might pay them to relocate?

The study shows that 33% or more of those going through foreclosure also involve some tenants who become the innocent victim. They are usually caught off guard with very little time to relocate. They are typically the last to know that their landlord is in trouble. A landlord does not want them to stop paying the rent, so he or she is not going to inform the tenants. Also, it causes confusion in the ownership in that a landlord may be accepting rent after the sheriff sale and they are no longer the owner. The instability and uncertainty can lead to fraud and there is usually a noticeable decline in the upkeep of the building during the foreclosure. A tenant never knows what is going to happen, and can get caught with all their stuff locked and boarded up in a building that was sold at auction. We have seen where the owner will trash the building when a foreclosure is eminent to "punish" the mortgage company making the building unfit for human habitation and displacing the innocent tenant(s). The utilities can be shut off and the tenant can be forgotten and abandoned while the future of a property is debated in a courtroom in Downtown Cleveland.

Brian
Posts by Northeast Ohio Coalition for the Homeless staff and Board.