The foreclosure crisis has left a very evident mark on homeowners. Banks foreclosed on a record number of houses at the height of the mortgage crisis, but it is not just homeowners feeling the effects of this nationwide epidemic. Recently, more attention has been paid to those not directly in charge of making the mortgage payments but who can still lose their homes if the property falls behind on payments: tenants. Tenants are vulnerable to feeling the effects of the foreclosure crisis that still plagues the American real estate market, and they are perhaps in even more danger than some homeowners because they can be at the mercy of banks when it comes to deciding whether they can stay or leave.
This issue has gotten particular attention in the urban neighborhoods surrounding Boston, where triple-deckers are common sights and it is not unusual to have four or five families in one location. Most property owners go in with the best intentions - investing in multi-family property, thinking that with all the rental income they'll have, they will be able to afford their mortgage payments. This is not always the case however, and multi-unit homes do go into foreclosure just as single-family homes do.
Help is available. Urban groups that look to help out tenants and homeowners in such situations are gaining momentum, particularly in Boston. City Life - also known as Vida Urbana by the many Hispanic clients it serves in the East Boston area - has now worked for over three years to help this foreclosure crisis in city neighborhoods. Founded in 2007 when the housing bubble burst and the real estate market first took a sharp decline, City Life represents tenants and is now finding it necessary to help the plight of the homeowners. The people who own these properties try to do their best to allow their families and the families who rent from them to remain on the property.
Zoe Cronin, an attorney representing these cases, says that these tenants have rights and must use them when fighting foreclosure since there is no real way to work with the banks to prevent it. This is because Massachusetts does not require owners to go to court to foreclose on property; they simply have to post a notice in a newspaper before they auction proceedings. This said, she has organized foreclosure sit-ins and prolonged people's stays in their homes, though all the cases City Life has represented have eventually succumbed to foreclosure. Still, she argues, time helps, and time is what these people need, especially when they are unaware of how much time they truly have in their homes because their landlords failed to let them inform them of foreclosure proceedings.
So far 400 buildings in the East Boston area have been foreclosed, and out of the population of 40,000 people, 500 to 700 faced eviction because of foreclosure on property they rent. In fact, unlike the rest of the country where it is largely homeowners who lose their homes to foreclosure, most of those affected by foreclosure in the Boston area are renters. City Life estimates that three-fourths of those who face foreclosure proceedings in the greater Boston area are tenants, a stark reminder of the effect the housing market crisis has beyond those who actually own property. A scary fact in these situations is that even if the tenants are completely on time with their rent payments, it is possible for them to get evicted if the bank takes over the property from its owners.
Realtors in the Boston area frequently try to make cash settlements with tenants, known as "cash for keys", which provides tenants additional money towards alternative housing in exchange for vacating in a timely manner, but many tenants have chosen to stay resolute and fight for their rights to their property.
Through eviction day sit-ins and legal and political action, City Life looks to make the public more aware of their options and pressure major lenders to understand the implications of their policies. They are not alone in using direct action against the threat of foreclosure, however. Many other organizations share this activist strategy apply pressure and influence banks to reduce the principal on mortgages, which some major lenders have begun to do. Bank of America is among those who are looking to reduce principal balances, having just recently announced the guidelines for principal reduction on many homeowner's accounts.
There have also been changes recently from banks that have realized the implications of foreclosing on multi-unit property. Fannie Mae changed its policy on evicting tenants a year ago, now banning such evictions on foreclosed properties it holds. Additionally, the lender also announced two months ago that it would not throw homeowners out of their properties, either. Many argue that though these new policies exist, their implementation is not guaranteed, and the way they are carried out in oftentimes uneven.
With the foreclosure crisis ongoing and evictions becoming a serious issue for many in the Boston area, it is important to seek the advice of an attorney who can help you through this complicated process. Lenders have different policies when it comes to eviction, especially for multi-unit properties, and borrowers are not aware of how eviction will affect them. Additionally, there is often little a homeowner can do to prevent foreclosure without the help of an attorney experienced in real estate issues. If you are a landlord or tenant, or are just struggling with your mortgage payments, please contact us to schedule a free consultation.
