Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
Articles |The FORUM |Law Library |Videos | Fraudsters & Co. |File Complaints |How they STEAL |Search MSFraud |Contact Us

Default crisis is evicting renters

Tenants forced out by foreclosures

Rafael Matos, 47, is fighting eviction from his home of almost five years after a bank took possession of the house in Dorchester that his former landlord once owned. The other two tenants in the building left quietly, Matos said. Rafael Matos, 47, is fighting eviction from his home of almost five years after a bank took possession of the house in Dorchester that his former landlord once owned. The other two tenants in the building left quietly, Matos said. (mark wilson/globe staff)

The foreclosure crisis increasingly is claiming the homes of people who never made the mistake of taking out an unaffordable mortgage: renters.

 

Hundreds of tenants in foreclosed buildings have been evicted or are facing eviction by mortgage companies that do not want to be landlords.

In Boston Housing Court, about 20 eviction cases a week involve tenants who live in foreclosed properties, according to housing lawyers. Chief clerk Bob Lewis said the volume of such cases has increased "certainly more than 100 percent since last year."

Through mid-August this year, 1,376 multifamily properties in Massachusetts had been foreclosed, according to new research by the Federal Reserve Bank of Boston. There were 750 multifamily foreclosures in Massachusetts in 2006.

The one-two punch of foreclosure and eviction often thrusts three or more families into a sudden housing search. The foreclosures are concentrated in lower-income neighborhoods. The evicted renters are often already struggling to afford the state's expensive housing.

Rafael Matos, 47, received an eviction notice in July from a company that represented the new owner of the three-decker off Dudley Street in Dorchester where he has lived for almost five years. The other two tenants in the building left quietly, Matos said. But Matos, a restaurant cook, is fighting the company in court.

"I pay my rent on time and I have to leave this place?" he said. "Come on. How am I going to find a new apart ment?"

Matos is a tenant at will. He can be evicted on short notice. But even having a lease is no protection against a post-foreclosure eviction. Under Massachusetts law, foreclosing owners are not required to honor leases signed by the former owner.

Tomorrow, US Representative Barney Frank said he plans to introduce federal legislation on foreclosures that includes a provision that tenant leases remain in effect after foreclosure, and that tenants without leases must receive 90 days notice before eviction.

"Banks will no longer be able to put their convenience ahead of people's ability to live," said Frank, who chairs the House Committee on Financial Services. "We have asked lenders, saying, 'You really shouldn't do this.' Now the next step is to make it mandatory."

Meanwhile, the Massachusetts Senate passed a bill in July that includes a provision preserving leases. A similar House bill does not include that provision. The two bills dealing with foreclosure-related issues await reconciliation.

The mortgage industry says its members are not equipped to act as landlords. The companies that are the new owners of these houses are typically investment vehicles that were set up to hold pools of mortgages. They have Wall Street firms that act as trust agents for them, and servicing companies that collect loan payments and do related administrative work. They do not have local agents to handle calls about broken plumbing. The firms say that it is also easier to sell a building vacant.Continued...

The industry said that the new owners are also the victims of landlords who didn't pay their loans. But several of the housing lawyers contend that many of the new property owners are specialized investment trusts that buy troubled loans with the intention of foreclosing, evicting, and then reselling the property.

Thursday is eviction day at Boston's Housing Court, a day devoted to cases brought by landlords seeking eviction orders against tenants.

Last week, Judge Jeffrey M. Winik pressed the companies seeking evictions to give tenants as much time as possible to find new housing.

Marie Nicole Metayer, a mother of three, was given until the end of February to find a new home for her family. William Auton, a lawyer representing the Bank of New York, said the bank was "showing a heart" by giving her a few extra months to move out. The judge said Metayer would barely have enough time to find a new apartment, because she must find a landlord that accepts federal Section 8 housing vouchers.

Metayer, who signed a one-year lease in April for her apartment in Dorchester, said afterward that she was stunned to be looking for housing again.

Most tenants do not get the benefit of judicial intervention. The new owners of foreclosed properties routinely send notices to tenants ordering them to vacate within 90 days, said lawyers involved in housing issues. Often the order is sweetened with a cash incentive for leaving quickly, known as "Cash for Keys," generally $500 to $1,500. Many tenants take the money and go.

The Boston Fed found that 29 percent of the 4,756 foreclosures in Massachusetts through mid-August this year involved multifamily buildings, although only 10 percent of the state's residential properties are multifamily. The number of foreclosures, and the number of multifamily foreclosures, both are on pace to double last year's totals.

While the proposed state and federal legislation would provide more protection for tenants with leases, tenant advocates want greater protections for at-will tenants, too. They would like to see a prohibition on "no fault" evictions, meaning landlords would have to demonstrate a reason, such as failure to pay rent. In the meantime, these advocates fight eviction orders with procedural delays, such as contending that tenants cannot be evicted if landlords have failed to repair code violations.

Such violations are common with foreclosed properties. Landlords who fall behind on mortgage payments often stop spending on maintenance well before the actual foreclosure. And utilities paid by the landlord are sometimes cut off after the foreclosure, either because the new owner is not aware the bills need to be paid or, advocates contend, to encourage tenants to leave.

Matos, for example, lost power for two days. His former landlord stopped paying the electricity bill. Matos had to get his own account.

His new landlord is an investment pool called "Carrington Mortgage Loan Trust 2005-OPT2." It was created by Citigroup Inc. in May 2005 to hold $75 million in mortgages the bank had purchased from lenders. Bear Stearns & Co. sold shares in the trust to investors, who receive the payments from those mortgages, and Deutsche Bank manages the trust.

So who decided to evict Matos? The paperwork said Deutsche Bank, which is listed in county records as the formal owner of the building after the landlord defaulted in May. But a spokesman for Deutsche Bank said that was a technicality; the company was simply acting on behalf of the trust, which has terms that dictate what the bank must do in the event of foreclosure.

Tenant advocates say this diffusion of responsibility is no excuse. "If they [Deutsche Bank] have done these agreements, then presumably they could do a different kind of agreement," said Maureen E. McDonagh, a lawyer representing Matos. "They choose not to."

City Life, an advocacy group in Jamaica Plain, has pledged to block the door of any apartment where Deutsche Bank attempts to complete an eviction.

A company spokesman said Deutsche Bank had mailed a letter to the servicing companies that manage the mortgages in its various portfolios, asking them to show compassion when possible. It also asks them to make clear in legal filings that Deutsche Bank is not the acting party. "Deutsche Bank isn't involved in these evictions," said spokesman John Gallagher.

Matos, the only person left in his apartment building, wants to stay, but does not know where to send the rent money. His eviction hearing is scheduled for Oct. 30.

Binyamin Appelbaum can be reached at bappelbaum@globe.

com.

http://www.boston.com/news/local/articles/2007/10/21/default_crisis_is_evicting_renters/

Quote 0 0
Write a reply...