Tuesday, November 16, 2010

Johnson on En Masse Evictions Caused by Subprime Crisis

Creola Johnson has published Renters evicted en masse: collateral damage arising from the subprime foreclosure crisis in the Florida Law Review (62 Fla. L. Rev. 975 (2010), in case the Hein Online link doesn't work).

From the introduction:

Across the country, innocent renters are becoming victims of their landlords' inability to avoid foreclosure on their rental properties. Many are not receiving the legal rights that they are entitled to under federal and state law. For example, Marjorie Benedum and her husband Mel Harris came home from church in December 2009 to find a sheriff's notice on their door warning them to move out in ten days or be evicted from their Baltimore home. The notice came as a shock to Benedum and Harris as they had never failed to pay their rent on time. They learned their impending eviction was a result of a foreclosure on the property against their landlord. What the couple did not know when they found the notice of eviction is that they were entitled to stay in the property for ninety days under a new federal law. Luckily, this family learned their rights from a local attorney and did not have to immediately vacate their home, but not every family is so fortunate...

Many of the borrowers facing foreclosure are non-occupant owners. No doubt, some tried to be prudent investors who saw owning real estate as a long-term investment. Others were speculators or flippers-people who obtained adjustable rate loans to purchase homes for the sole purpose of reselling the homes at a profit within a year or two of purchase. However, when the housing bubble burst and economic conditions took a turn for the worse, many borrower-landlords became trapped with mortgage payments they could not afford and residential properties they could not sell.

The innocent victims of these borrower-landlords are consumers like the couple in Baltimore who simply had the misfortune of renting a house or apartment from a landlord unable to pay the mortgage. Despite having never defaulted on their rental payments to the landlord and the enactment of a new federal law giving tenants ninety days to vacate foreclosed properties, renters are being ordered to leave in as little as three days or face eviction. Some tenants are not even aware of the landlord's trouble until the sheriff's deputy arrives to evict them or until their utilities are turned off due to the landlord's failure to pay the utility bills. Scrambling to quickly come up with sufficient cash for moving expenses and a security deposit to get a new place to rent, some tenants then find themselves on the brink of homelessness.

This happened to some friends of ours here in Athens.  They had to scramble to find a new place to rent within a week, and they had to leave their huge, beautifully tended garden behind.   Fortunately they were able to find a new place in the same neighborhood quickly, but it was still a stressful and unfortunate situation.  I wish I'd know about this new federal law - perhaps it would have helped them. At least, maybe they would have been able to stay long enough to harvest their tomatoes!

Jamie Baker Roskie

http://lawprofessors.typepad.com/land_use/2010/11/johnson-on-en-masse-evictions-caused-by-subprime-crisis.html

Housing, Mortgage Crisis, Scholarship | Permalink

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