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Hernando Today

Renters Suffering From Foreclosure Crisis

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By TONY HOLT

Hernando Today

Published: May 21, 2008

JACKSONVILLE - Imagine waking one morning to the sound of someone pounding on your door and then delivering an ominous message.
Pack your bags and move out. You're being evicted.
The person at your door is someone from the bank. He or she is there to inform you the house you're renting is being foreclosed. Without notice, you're out on the street.
That is happening more and more throughout Florida and across the country.
But renters have rights.
"This is a brand new oyster that we're opening," said Jacksonville consumer attorney April Charney, who has worked up to seven of these cases in the last few weeks.
"One of the reasons you pay rent is to peacefully live in that property," she continued. "The landlord can't come in and eat your food or mess up the garage … This is another example of what a landlord can't do."
Should the landlord fail to pay the mortgage, the renters have the legal leverage to get the courts involved and pull the rent money from the property owner. Basically, they can force a landlord into bankruptcy.
"It essentially stops the foreclosure dead in its tracks," Charney said.
Tenants can make the same such claim whenever a landlord fails to pay a utility bill. If the water in an apartment building is shut off because the property owners neglect to make the payments, then the renters can claim statutory damages. The penalty can be up to three months rent, she said.
Lenders also have been more sympathetic. There are reports of some bankers giving renters days or weeks to look for a new place and offering them money for lease or moving expenses. The agreement is known as "cash for keys."
According to census figures for 2006, an estimated 32.7 percent of residents in the United States are renters. That number might be higher in a place like Spring Hill, where the residential boom from a few years ago led to a lot of people buying houses and renting them out for extra income.
But many of those homebuyers made their purchases without knowing what would be in store once the market took a dive. Many of them are getting buried in debt and slipping into foreclosure.
Charney said the recent pattern of renters losing their homes to foreclosure began only a few months ago. Attorneys are working together to find out how to apply existing statutes to an unexpected new trend.
"Lawyers are doing this all over the country," she said. "We're all seeing this evolve in our communities."
A mortgage reform bill passed the U.S. House of Representatives in November that was partially designed to provide relief to tenants displaced by foreclosures. If landlords fail to pay the mortgage and the bank lender decides to foreclose, tenants would have six months to find another residence.
But that law would not go into effect until next year at the earliest, according to CNN.com.

Reporter Tony Holt can be reached at 352-544-5823 or wholt@hernandotoday.com.

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