Landlord woes throw tenants out of housing

Foreclosures mean renters often get little notice, lose deposits

By Steve Law

The Portland Tribune, May 7, 2009, Updated Oct 30, 2009 (10 Reader comments)

L.E. BASKOW / TRIBUNE PHOTO

Tommy Schopp sits with his dog, Burke, on the front steps of the Southeast Portland house he rents with two roommates. They recently received a notice the property will be sold in a foreclosure auction in August.

Like bombs pelting Afghan villages, the explosion of home foreclosures in Portland is causing collateral damage to innocent bystanders — in this case, tenants.

Forty percent of all families displaced from their homes by foreclosure are tenants evicted when their landlords lose rental properties, according to a recent national study. Tenants are getting booted even when they faithfully pay rent and have long-term leases.

No one has hard numbers on the number of local renters evicted, but several frantic tenants a week have been contacting Portland’s Community Alliance of Tenants after getting notice their homes are going into foreclosure, said Nancy Swann, the nonprofit group’s education program coordinator. Lenders sometimes provide tenants only 10 days notice to vacate, Swann said, and tenants routinely lose any deposits paid when they moved in.

Tommy Schopp, 37, who lives with two roommates in inner Southeast Portland, received notice in March that his three-bedroom rental house is going into foreclosure.

“We contacted the landlord, and he told us, ‘Don’t worry about it; it’s probably a clerical error; the mortgage is fine,’ ” Schopp said.

But Schopp learned his landlord wasn’t being straight with him. He did some research and found the house was listed on two Web sites that market foreclosed homes. Subsequent mailings revealed the house was scheduled to be auctioned Aug. 3 on the Multnomah County Courthouse steps. One notice said the landlord hadn’t made mortgage payments to his lender since October, though Schopp and his roommates have continued sending him rental checks.

Schopp is wondering how long he may remain in the house, who to make payments to and what will happen to more than $900 in deposits he paid to the landlord.

Schopp’s landlord could not be reached for comment.

Current Oregon laws pose a “Catch-22” dilemma for tenants, causing anxiety, confusion and dislocation.

A property owner retains the right to rescue a home from foreclosure until the day it’s auctioned on the courthouse steps. Yet mortgage lenders and prospective buyers of foreclosed homes are permitted to send eviction notices to tenants a month before they gain title to the house, said Sybil Hebb, a lobbyist for Portland-based Oregon Law Center, which advocates for low-income people.

Tenants with long-term leases are legally bound to keep sending rent to their landlord. Yet those leases become worthless once a property is foreclosed.

Landlords who are failing to pay their mortgages typically neglect to return deposits to tenants as well, Hebb said. Though that’s not legal, it’s usually not worthwhile for tenants to sue beleaguered landlords to recover those deposits, she said. That’s making it hard for tenants to make first-and-last payments to secure new rental properties.

Many Portland State University students, who rely on off-campus housing, have been evicted due to foreclosures against their landlords, said Lissa Kaufman, coordinating attorney for PSU’s Student Legal and Mediation Services.

“These sorts of no-fault evictions are big problems,” Kaufman said, because they can be destabilizing for students and cause some to drop out of college.

“Once you lose your house,” she said, “it’s really easy for everything to fall by the wayside.”

The evictions are affecting people in Portland suburbs as well.

Beaverton parent Kelli Pement, 31, said she felt really lucky getting a rental house close to Southridge High School in Beaverton, which her son attends. Her 12-year-old daughter takes a school bus home that drops students off at Southridge.

Pement got socked with a $50 rent increase in January and then sorrier news on Valentine’s Day: The property is being foreclosed. First, the landlord told Pement he was scrambling to save the home. But then a process server notified her the house is scheduled for a June 12 auction.

Pement is paying $1,400 a month in rent, yet the foreclosure letter showed the mortgage is only $986, and it isn’t getting paid by the landlord. Her landlord subsequently said he’s trying to sell the home.

“We don’t know who to pay rent to,” Pement said. “It has been really, really, really stressful.

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