I can't help but thinking that everyone wants to claim victim here. Sure, these people are in a bad spot, but a victim? I don't think so. These people who are renters have not lost their jobs, have not fallen on hard times. they simly have to move. Agreed, it is a hassle, and there may be times where they will lose a security deposit, but they are still on their feet.
I see this as a way for the market to correct itself. As an investor I am waiting for the good deals to come along. Once they do I will grow my portfolio as much as possible to take advantage of the market conditions. Some of these "victims" can easily turn the situations around to become investors themselves. My first property I woned came because I was a renter in a place that went into foreclosure. I ended up buying it from the bank at a deep discount.
One thing that renters will face is higher demand for apartments. This will cause rent prices to rise but this is simple economics. I didn't see any government agencies talking about all the landlords that were lowering rent or having units sit unoccupied for long periods of time in the recent boom market of sales? When all you needed to get a loan was a pulse the rental market slowed considerably. Now there is a correction. I say, let it correct itself!
The mortgage mess is claiming a new group of victims: renters.
Across the country, a rising number of landlords are falling behind on mortgage payments, sending their properties into foreclosure, according to legal-services attorneys, local officials and financial experts — and in many cases, their tenants are being forced out of their homes. Often, the tenants' first inkling of trouble occurs when they get a letter from the bank directing them to leave the premises.
"They just don't know what to do — they leave town, move in with their mothers, end up in shelters," says Janet Merrill, an attorney with the Massachusetts Justice Project, a Worcester legal-services agency that runs a hotline for low-income people.
Strong demand and a tight supply is making for a competitive rental market in San Francisco. And experts say it will be January before the full impact of the mortgage crisis on the rental market is known.
Ms. Merrill's group gets four to five calls a day from renters facing eviction resulting from foreclosure. One caller recently received a letter from a bank saying her six-unit apartment building had gone into foreclosure and ordering her to vacate her unit by Oct. 31.
The woman, says Ms. Merrill, had lived in the apartment with her two sons for a month. Before that, they were in a unit in another building that also went into foreclosure. In that case, the woman accepted a "cash for keys" offer of $800 to leave the apartment. When she called the hotline, she told Ms. Merrill, "I want to stay here. I'm so sick of moving."
The scope of the problem recently became clear to Judith Liben, a housing attorney at the Massachusetts Law Reform Institute, a Boston legal-services center. After hearing about tenants' evictions in Massachusetts, she asked other housing advocates across the country whether they were seeing similar problems. The response — from Nevada, California, New York and other states — was overwhelming, she says.
In many cases, the homes and apartments entering foreclosure are owned by investors who got low-rate teaser mortgages and intended to hold the buildings for a few years and then sell them at a profit — before their mortgage rates rose. Now, with the housing market badly depressed in many markets, the owners can't sell the homes or afford the higher mortgage payments. Many are defaulting.
In most states, says Ms. Liben, foreclosure voids leases, and banks move quickly to get tenants out. "Depending upon the state, tenants get between three and 30 days notice," she says. A few states have laws protecting tenants from eviction in the event of foreclosure, and others are moving to give renters more notice, Ms. Liben says.
Renters' woes are beginning to attract wider attention. Yesterday, Eric Rosengren, in his first speech as president of the Federal Reserve Bank of Boston, said that the high number of foreclosures on multifamily homes in parts of Massachusetts "highlights a potentially serious problem for tenants, who may not have known that the owner might be in a precarious financial position."
Ms. Liben summed up the problem in testimony last month before the House Financial Services Committee: "It is now clear that, nationwide, tenants who did nothing wrong except to rent from a defaulting owner are suffering harsh collateral damage from the mortgage fallout." She added that foreclosing banks often refuse to pay the utility bills or make repairs on the properties.
In Hennepin County, Minn., which includes Minneapolis and its suburbs, there were more than 3,000 foreclosures last year — nearly twice the 2005 number. "You just wouldn't believe it here," says Amber Hawkins, an attorney with the Foreclosure Relief Law Project, part of the nonprofit Housing Preservation Project based in St. Paul. "There are areas of [North Minneapolis] that are just decimated. House after house is boarded, vacant and abandoned."
Ms. Hawkins says that banks have traditionally pressed renters to leave quickly so that they can resell the property. But, she adds, "nothing is selling right now." As a result, empty buildings end up sitting on the market and become "magnets for criminal activity."
That also means there are fewer homes to rent — even though the number of renters isn't declining.
Danilo Pelletiere, research director at the National Low Income Housing Coalition in Washington, says that in the short term, the number of renters is going to rise faster than the number of available units. "What do you do with the foreclosed homes?" he says. "[Low-income renters] can't necessarily move to a vacant McMansion somewhere out in the suburbs."
Ms. Merrill says the lack of affordable rental units is a huge problem in her area of Massachusetts. "People are applying now for public and subsidized housing," she says, but the waiting lists are long and the alternatives are bleak. Even if Ms. Merrill can find her twice-evicted client another acceptable apartment, she says, "how does she know another place won't be foreclosed on too?"
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Countrywide Financial tapped into an $11.5 billion line of credit Thursday to "weather the storm" and address its looming liquidity crunch. Countrywide Financial is the #1 writer of mortgage loans in the United States.