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Renters losing homes as landlords fall into foreclosure

Photo by Scott Iskowitcz

Two months after Angie Fletcher and Shawn Marlin moved their family of eight into a five-bedroom rental home in Valrico, the home fell into foreclosure.

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By SHANNON BEHNKEN | The Tampa Tribune

Published: July 24, 2009

TAMPA - Two months after Angie Fletcher and Shawn Marlin moved their family of eight into a five-bedroom rental home in Valrico, the home fell into foreclosure.

The landlord hadn't paid the mortgage since November.

It was the third time in two years the family found themselves losing a home to foreclosure.

"This shouldn't be happening," Fletcher said. "I mean, I don't think it should be — especially to people who are willing to pay their rent, willing to be good tenants. It's just not right, it shouldn't be happening."

But it is happening repeatedly to families throughout the country. Renters in Florida and the Bay area have been particularly hard-hit because of the large number of investors who purchased homes during the boom and now can't afford to keep them.

Nationwide, about 40 percent of families facing eviction are renting in foreclosure, according to the National Low Income Housing Coalition. Congress recently strengthened laws that protect renters' rights, but families are still losing homes even though they have never missed a payment.

"You can't always protect yourself from landlords acting in an unscrupulous manner," said Danna Fischer, legislative director for the coalition.

Until recently, renters had few rights in a foreclosure. Once the lender took back a home, the renter usually had little time to move.

That changed in late May when Congress passed the Protecting Tenants at Foreclosure Act.

Renters now must be given at least 90 days to leave. In some cases, renters will get to stay even longer. If the new owner is an investor, the renter can stay until the lease expires. But if the new owner is the lender or the home is sold to someone who wants it as their primary residence, the 90-day rule applies.

During the foreclosure process — before a lender takes back the home — renters can stay as long as they have a lease and continue to pay their rent.

The new rules were a triumph for renters, but they didn't come close to taking care of the problem, Fischer said. Many renters who live in homes in foreclosure are dealing with landlords who stop taking care of the property.

The first time Fletcher found herself in a home in foreclosure, she had been there only a few months. The second time, she stayed a year and had just signed a new lease when she learned the landlord's lender was pursuing a foreclosure. At least that time, she said, she felt like the landlord didn't try to trick her.

"I understand that people have hard times," Fletcher said.

This time, she thought she had done her homework. She checked public records to confirm the home was not in foreclosure. She explained her history to the landlord and asked for assurance that the loan was current.

She said representatives for the company, Valrico-based All About Realty, promised they had confirmed the mortgage was in good standing.

But Cyndee Jacobs, the broker of the office, insists Fletcher never asked. She said she did not know the mortgage was in default and that it is not her responsibility to check before leasing a home.

Public records show that the home Fletcher rents at 1510 Main St. is owned by Brian Ciroli, Jacobs' son. Ciroli is listed in state records as a sales associate for All About Realty. He could not be reached for comment.

Jacobs said her son is trying to modify his loan and avoid foreclosure. She said she spoke with him about Fletcher's situation, and they are considering releasing Fletcher from her lease and reducing her rent until she is able to leave.

What can renters do to avoid a similar situation?

Before renting, check court records to make sure a foreclosure lawsuit hasn't been filed. However, because lenders are overwhelmed with delinquent homeowners, they often don't file foreclosure papers until the owner has not paid for five or more months.

Florida law requires lenders to name tenants in a foreclosure lawsuit, too. That's the way many renters find out about the foreclosure.

As for Fletcher and Marlin, they're saving for another deposit and want to find a new home before school starts next month. This time, they hope to stay a while.

"I think a lot of people don't realize how this foreclosure crisis affects renters," Fletcher said. "This is the lowest I've been in my life, and I've done nothing wrong."

Reporter Shannon Behnken can be reached at (813) 259-7804.

Reporter Shannon Behnken can be reached at (813) 259-7804.

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