Why Foreclosures Threaten Baltimore City Renters

Foreclosure timeline in the State of Maryland.
Foreclosure timeline in the State of Maryland.  For more information visit www.MDHope.org.

The foreclosure crisis is predominantly viewed as a crisis of homeownership, primarily affecting homeowners who for any number of reasons cannot afford to stay current on the mortgage.  However, this perception minimizes the fact that areas such as Baltimore City are experiencing a simultaneous crisis of tenancy.

Foreclosures in Baltimore City threaten renters far more than in the rest of the state.  This threat is particularly distressing because a renting family may unknowingly and wrongfully face eviction despite being current on their lease.  Tenants are at extreme risk when landlords do not inform them about foreclosure actions, or when they are not aware of their right to retain possession following a foreclosure sale.  [Information for renters facing foreclosure can be found HERE.]

The scope and implications of the threat to tenants are not immediately evident in the data published by the Maryland Foreclosure Task Force Report in January 2012.  From January to September of 2011, 85% of all Notices of Intent to Foreclose statewide were sent to owner-occupied properties, with the remainder sent to investor-owned properties; likely occupied by renters.  On the surface, this proportional threat to tenants is not striking.

However, in Baltimore City the percentage of notices sent to owner-occupied properties drops to 70%. This number drops further when looking beyond the notices to the foreclosure actions which were actually filed.  St. Ambrose staff recently compiled data on foreclosure actions filed in Baltimore City from September through November of 2012.  Of the 618 foreclosure actions filed during this time, 334 of the properties were not the owners’ principal residence, according to data from the State Department of Assessments and Taxation.  A mere 54% of the properties are owner occupied; the remaining 46% are investment/rental properties.

This data shows that the threat to renters is largely local and entirely real.  A disproportionately large number of Baltimore City foreclosures filings are on properties which were purchased as investments.  Occupying these properties are tenants at risk of being displaced due to foreclosure actions against the landlords.  These tenants comprise over half of Baltimore residents. Census data from 2010 shows that 52% of Baltimore City homes were rented.  The Census counted 296,685 housing units, of which 84% were occupied.  This leaves approximately 250,000 occupied properties, of which 130,000 are rented.  Families in any of these 130,000 properties could be current on their rent and then be shocked to find foreclosure or eviction notices.

There is also a measurable impact of foreclosures on children in these rental properties.  According to recent reports by the Baltimore Neighborhood Indicators Alliance, 2.7% of students in Baltimore City schools were affected by foreclosures in 2009.  Of these children, only 51% lived in owner-occupied properties.  This number was down from 73% in 2005.  The report attributes the increasing impact on children in rental properties to the surge in investment property purchases during the housing boom.

The Task Force Report, much like the nationwide conversation on foreclosures, pays minimal attention to the risks faced by tenants.  The fact is that the impact on tenants is a rarely noted yet extremely troublesome consequence of the foreclosure crisis. The plight of tenants is overshadowed by that of homeowners, but that cannot continue in a city where a foreclosure is just as likely to impact the occupancy of a renter as it is that of a homeowner, where the majority of residents rent, and where the impact on children is so significant.

If you are a renter, know your rights.  Open any and all mail addressed to “All Occupants” or “Current Resident,” as it may relate to a foreclosure action.  Occupants of a property are required to be sent such filings in foreclosure cases.  If a property is active in foreclosure but has not yet been sold at foreclosure, you are still obligated to pay the rent, and the landlord may initiate an eviction proceeding for failure to do so.  You also have the right to remain in the property during the foreclosure action pursuant to your lease, and the landlord must honor the terms of your security deposit in any event.  Following a foreclosure sale, most tenants have the right to remain in the property until the end of their lease.  Tenants renting month to month must be given 90 days notice to vacate.

Foreclosure purchasers who ignore your rights or who are not aware that renters are occupying the property may institute an eviction proceeding.  An eviction may not occur until the court has awarded possession to the foreclosure purchaser following ratification of the sale, and you should be mailed copies of these filings and orders.  Baltimore City occupants will receive notices of eviction by mail 14 days prior to an eviction and by posting on the property 7 days before an eviction.  Residents in other counties may not receive specific notices of the eviction date.

If you have reason to believe your landlord is facing foreclosure, or if you are facing eviction or foreclosure yourself, free legal assistance is available.  Contact St. Ambrose Housing Aid Center – 410-366-8550 – as soon as possible to see how we may be able to assist you.

The Baltimore Homeownership Preservation Coalition

The Baltimore Homeownership Preservation Coalition (BHPC) and the Public Justice Center have teamed up to launch a citywide renters’ rights campaign called “Landlord Foreclosed? Renters Have Rights”.  The campaign illustrates how homeowners are not alone in their struggles against foreclosure; renters too are confronting a similar plight.  According to the BHPC, approximately 40% of all started foreclosures are for investor-owned residential properties.

The campaign provides tips for renters whose landlords are facing foreclosure, as well as how to avoid loan scams and how to report mortgage and foreclosure fraud. Please see their recommendations below and visit their website for further information regarding the Renters’ Rights Campaign.

If you are a renter whose landlord is facing foreclosure:

•Open all mail addressed to “occupant” or “current resident”, especially if it comes from a court, law firm, bank or real estate agent.

•Pay your landlord rent until you receive notice from the new buyer after the foreclosure is complete.

•Seek legal advice before accepting a “cash for keys” deal (when the bank offers you a sum of money to vacate the property immediately).

•Contact the not-for-profit Public Justice Center for trustworthy and FREE legal advice at (410) 625-9409. (The link of BHPC’s website for the Public Justice Center doesn’t work, so use this one: http://www.publicjustice.org/our-work/tenant-advocacy)

To avoid loan scams, know the signs:

Do not trust anyone who:

•Guarantees to stop foreclosure.

•Instructs you not to contact lender, lawyer, housing or credit counselor.

•Collects fee before providing service.

•Accepts payment only by cashier’s check or wire transfer.

•Encourages leasing of home to “buy back over time”.

•Requires mortgage payments be made to them, rather than lender or servicer.

•Asks for deed or title to be transferred to them.

•Offers to buy house for cash at fixed price not set by market.

•Offers to fill out paperwork on your behalf.

•Pressures you to sign paperwork you haven’t thoroughly read or don’t understand.

BHPC recommends checking out Neighborworks America’s Loan Modification website that has more information about knowing the signs that you’re being scammed and how to protect yourself. Their site is: http://www.loanscamalert.org/

If you think you’ve been a victim of mortgage or foreclosure fraud, report it to the Maryland Office of the Commissioner of Financial Regulation by calling 1-888-784-0136. BHCP also has a page dedicated to avoiding foreclosure scams on their site.

The BHPC is a partnership in which nonprofit, governmental, and professional entities collaborate to prevent or lessen the effects of foreclosure on Baltimore families and neighborhoods. Membership is free for both organizations and individuals who are committed to preventing foreclosures and stabilizing neighborhoods that are dealing with significant changes caused by the current housing crisis.

St. Ambrose Housing Aid Center also provides a great deal of support to families in danger of losing their homes. The Foreclosure Prevention Division actively promotes continuing homeownership through education and reform. This group of counselors and attorneys identify predatory activities and unfair mortgages, and provide legal representation to clients who are victimized by fraudulent refinancing or home improvement scams in addition to helping those who encounter other home ownership issues. To receive free home ownership counseling, education, and other services at St. Ambrose, please call 410-366-8550. St. Ambrose also recommends the Consumer Tips for Avoiding Mortgage Modification Scams and Foreclosure Rescue Scams developed by the Office of the Comptroller of the Currency.