Renters being hit just as hard by foreclosures

[nichomachus]

http://www.boston.com/realestate/news/articles/2008/05/07/study_foreclosure_surge_hits_new_england_renters_hard/">Foreclosures affect renters just as much as homeowners

WASHINGTON—Lease-abiding renters in four New England states are losing their homes to foreclosure as fast or faster than single-family homeowners who default on mortgages.
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That's the conclusion of a report released Wednesday by the Washington-based National Low Income Housing Coalition.

The report examines Massachusetts, Connecticut, Rhode Island and New Hampshire, which have large numbers of two- and three-family homes and apartments.

The NLIH estimates at least 45 percent of the housing units in the final stage of foreclosure in those four states were occupied by renters whose landlords were behind on payments.

When foreclosures take place, banks want the renters out -- they don't like to take over occupied property. You would think they would like to at least get the rents as income, but they don't.

For many people, especially in the northeast, moving into a new apartment can mean coming up with the first and last month's payment, as well as one month security deposit, and the cost of moving, as well as a realtor fee where necessary.

When I moved into my last apartment in Boston, I had to come up with $8,500 in cash before I could move in. A lot of people can't do that.

[phantom power]

1. I can see why banks wouldn't want that hassle.

Dealing with renters is a lot of work. No bank is going to want to handle collecting rent, doing superintendant duties, evicting bad renters, etc. And can you imagine trying to sell a house on auction, with renters living there, at which point you'd have to evict them anyway?

[nichomachus]

2. There have been cases

where the banks have had buyers for the property and the buyers wanted the tenants in there -- but still no deal.

[alstephenson]

3. They can hire professional management companies to do these things....

The banks are doing things just like they always have - default, foreclosure, eviction, sale. They have no interest in thinking "out of the box" and keeping people(tenants)in their homes, even though it may make economic sense. They are obviously expecting the U.S. taxpayer to bail them out - the government or some quasi-government entity will buy their portfolios of non-performing assets and the banks will go on their merry way.