Eviction can come suddenly for renters

By Cynthia Osterman

SEATTLE (Reuters) - As the mortgage crisis forces more properties into foreclosure, even renters are feeling the pain.

When a landlord cannot pay the mortgage, tenants can face eviction, financial loss and pressure tactics from new owners who want them to move out. And some are ending up homeless.

Teacher Stuart Briggs was plunged into a nightmare when lenders foreclosed on his landlord last year: Utilities were cut off and he endured months with no lights or working toilets.

Vagrants took over an empty unit, and the building, in Oakland, California, fell into disrepair. Next the bank demanded that he and the other tenants pay five months rent at once or face eviction in three days.

"We had no idea this was coming. We were stranded," he said.

Realtytrac, a firm that monitors foreclosures, estimates that 20 percent of foreclosures nationwide involve rental property and that number rises to around 45 percent in some places like Las Vegas and San Diego.

In Minnesota, tenant hotline HOMEline found the number of calls it got from renters facing eviction due to foreclosure rose to 427 last year from 47 just two years earlier.

For renters, the crisis often begins unexpectedly as owners are rarely required to tell tenants they are in arrears.

Darrell Smith and his wife, who rented a house in Phoenix for $1,245 a month in mid-December, can attest to that.

Little did they know that, when they signed the lease, the house had been in foreclosure since November. Just one day after they moved in, notice was posted on the door that the house would be auctioned off to pay the debt.

They had paid the landlord $5,500 in move-in costs including $2,200 for an option to buy the house in a year. They also spent $11,000 in moving expenses, Smith said.

They are trying to fight in court but so far have only gotten an $1,800 judgment against them for not paying their next month's rent. "Me and my wife don't know what to do," Smith said. "We've had one nightmare after another with this house."

FROM APARTMENT TO HOMELESS SHELTER

More often, tenants don't fight when lenders or landlords tell them to move out, and they almost always lose their security deposits and any advance rent payments, according to housing advocates.

Rosemary Spencer and her two children are being forced out of the house that she has rented on Chicago's South Side for two years because of foreclosure.