FORECLOSURES REACH RENTERS

Tony Jones arrived home recently to find an eviction notice tacked to his front door.

The 52-year-old electrician said he had been a good tenant, paying rent on a house on Rockwell Street in Atlanta for eight years. Evidently his landlord had not been as faithful.

So the bank foreclosed. A Fulton County magistrate judge told Jones he had seven days to get out.

“I don’t know what I’m going to do,” Jones said.

Renters are some of the less obvious victims of the home foreclosure crisis. Even if a tenant has paid the rent, sometimes the landlord has fallen behind on the mortgage payments. And when a property is foreclosed on, most tenants are unaware they are about to be ousted until they get an eviction notice. Unlike some states, under Georgia law the tenant is not informed that a property is in foreclosure until after the process is over.

Renters have little recourse under the law. They can appear in court to answer the eviction notice, a process that could delay their ouster for up to 21 days. But in general a judge is bound by law to order a post-foreclosure eviction, said Bill Brennan, director of the Atlanta Legal Aid Society’s home defense program. A renter could sue the landlord for breaching the terms of the lease, but that could take months or years and still wouldn’t allow them to remain in the home.

“The reality is that a foreclosed tenant has no rights,” said state Sen. Vincent Fort (D-Atlanta), who plans to push legislation to address the issue in the upcoming session of the state Legislature.

There are no clear statistics on foreclosure-related evictions of renters. However, in October, 31 percent of U.S. foreclosures in RealtyTrac’s active foreclosure database had mailing addresses for the owner that did not match the property address. If a property isn’t occupied by the owner, that may indicate it is a rental, said RealtyTrac spokesman Daren Blomquist. That rate in the third quarter of 2007 was 20 percent.

Fulton County Magistrate Judge Louis Levenson, who presides over what’s called dispossessory court, said he has seen a tenfold increase over the past two years in renters who are being evicted.

“The extent to which the foreclosure and mortgage crisis has crept into the landlord/tenant world is very visible now,” Levenson said. “Post-foreclosure eviction cases used to be the exception.”

Associate Magistrate Judge Robert Leitch in DeKalb County said, “It was a problem even before this crisis. It’s just there’s almost certainly more of it now.”

Such cases also are popping up with increased frequency in Gwinnett, said Magistrate Judge Robert Mitchum.

“These are uniformly very sad cases,” Mitchum said. “Usually you didn’t even know what was going on. You came home one day and saw a pink slip on the door.”

The sheriff in Cook County, Ill., rankled the banking industry and garnered national attention Oct. 9 when he halted all evictions in his jurisdiction. Sheriff Tom Dart said he was tired of his deputies showing up to evict home-owners and finding renters there. Dart ended the moratorium after meeting with judges to ensure renters are given a 120-day grace period before moving, as required by Illinois law.

When tenants in Gwinnett get the boot, it’s Maj. David Parr’s deputies who evict them. Parr, of the county Sheriff’s Department, sees tenants as innocent victims caught in a situation that “isn’t morally right.”

“We hate it, but if we don’t execute a valid order, we’re violating our oath of office,” Parr said.

Ella Brown contacted Fort, her state senator, upon receiving a notice Oct. 15 that she was going to be evicted from the two-bedroom bungalow in southwest Atlanta she has rented since 1986. The 48-year-old gestured toward the front hall, one of many spots in the house that are filled with memories. It was in that hallway that she went into labor unexpectedly 21 years ago and delivered twin sons.

“There’s been years of good times here,” said Brown, glancing around a bedroom crammed with her children’s high school trophies and photographs.

Now Brown will have to scrape together the money to cover moving costs and a deposit on a new place, with little time to shop around.

The California Legislature passed a law this year that requires renters to have 60 days’ notice prior to being evicted from a foreclosed property. In Chicago, a new ordinance requires tenants to be informed within seven days of the beginning of foreclosure proceedings.

The Ohio Legislature is considering a Renters Protection Act, which would require landlords to tell potential tenants if a rental property is in foreclosure and notify current tenants of a foreclosure within 30 days of the filing.

Fort said he would like to see similar proposals debated when the Georgia Legislature convenes in January. At a minimum, he thinks tenants should be allowed to stay in their homes for an extra month or two. Fort may also advocate for existing leases to be binding on the new owner.

“To me the only issue would be if the bank was having to maintain the property while the tenants are there for 60 days,” said Debbie Pennington, president of the Georgia Mortgage Bankers Association.

“What happens if the tenant destroys the property? They’re mad at the landlord and there’s no deposit from the tenant to cover the damage, because the landlord’s already taken that.”

Pennington said the primary goal of mortgage banks is to get a tenant out so they can put the house back on the market as quickly as possible.

A bill to protect renters may be on the list of legislative priorities for Georgia Watch, a consumer group, executive director Allison Wall said. The details are still being ironed out.

“We’ll probably look at what has been done in other states,” Wall said. “This is not an issue that is new or limited to Georgia.”

Any proposed solution won’t get far without support from the Legislature’s Republican majority.

Senate Majority Whip Mitch Seabaugh (R-Sharpsburg) said the issue hasn’t been on his radar. However, Seabaugh said he and his fellow lawmakers are “willing to listen to any good idea that does the right thing.”

The Republican leadership has shown a willingness to tackle some issues related to the foreclosure crisis.

Last year, the Legislature passed a bill requiring lenders to notify homeowners at least 30 days before holding a foreclosure auction.

“Even last year when we passed that legislation, I don’t think we had a feel for the magnitude of where foreclosures were going at that time,” Seabaugh said.

2.5 million: New foreclosure filings in the United States as of September, the latest month for which statistics were available.

96,311: Foreclosures in Georgia as of September, the eighth-highest in the country.

Source: RealtyTrac.com

FORECLOSURES BY COUNTY

County….Jan.-Oct. 2007..Jan.-Oct. 2008

Fulton….18,710……….20,128

DeKalb….12,090……….12,553

Gwinnett ..7,426 ……….9,905

Cobb ……5,825 ……….7,184

Clayton….5,574 ……….6,322

*According to RealtyTrac.com