New report finds that as thousands of rental buildings in Chicago enter foreclosure, tenants are being unjustly uprooted
While much of the response of the foreclosure crisis has been focused on the negative effects on homeowners, they are far from the only victims. Tens of thousands of Chicago region renters have been displaced—sometimes illegally—due to rental buildings going into foreclosure as well. The Lawyers’ Committee for Better Housing (LCBH) recently released a report that found that, in 2010, nearly 6,000 apartment buildings went into foreclosure in the City of Chicago, affecting more than 17,000 units. Every week in 2010, 123 apartment buildings went into foreclosure.
Read the press release
Read the report
Communities of color are disproportionately impacted by foreclosures on rental buildings. The report finds that communities with more than ten percent of their rental units in buildings that are in foreclosure are almost all concentrated on the South and West Sides of Chicago. In communities like Englewood, East Garfield Park, and Avalon Park, nearly one in five rental units is in a building in foreclosure.
What does foreclosure mean for tenants? Tenants have a right to occupy the unit for the remainder of their lease under federal law (or if they don’t have a written lease, they have a minimum of 90 days to move after the court approves the foreclosure sale), but it doesn’t always work out that way. Servicers who take ownership of buildings sometimes try to force tenants to move before they need to leave by posting misleading notices or harassing tenants, who are often unaware of their rights to remain. The Lawyers’ Committee for Better Housing, which works with tenants to stop illegal evictions, documented instances of misleading and harassing communications:
Problems can arise even before a loan servicer takes possession of the building. Before the foreclosure is completed—which often takes more than a year—the original landlord is still responsible for maintaining the building and collecting rent. Sometimes, the landlord disappears and fails to perform those duties, allowing the building to fall into disrepair. After the servicer takes possession, it is required by law to take over the responsibilities of a landlord and notify tenants that the building has changed hands. In order to avoid those responsibilities, servicers often fail to notify tenants that there is a new landlord or tell them whom they should contact to report disrepair, pay their rent, or collect their security deposit. Tenants often continue to pay rent to a previous landlord and find that the servicer later tries to collect back rent. The result can be an uninhabitable, potentially dangerous environment for tenants who do not have the resources to find other housing.
One client of LCBH, Verna, found herself in this situation. Verna is a grandmother living in South Lawndale with her daughter and three young grandchildren. The four-unit apartment building she lived in went into foreclosure and was taken over by its servicer on October 1, 2010. The servicer never notified tenants that they had taken over as landlord; as a result, Verna continued to pay rent to the previous landlord. Even worse, she started to experience serious problems with her unit and had nowhere to turn to get them repaired. Her furnace stopped working in October, even though she was current on her payments. For five months, Verna had to use her oven to heat her apartment, putting her young grandchildren at risk. After she heard rumors from neighbors that the building was in foreclosure, Verna contacted the lawyers for the servicer, who told her—incorrectly—that she had a month to move or be kicked out. When she reported her problem with her furnace to the servicer, it told her it had no responsibility for the building’s condition, even though, as the building’s owner and landlord, it is required to maintain the building to code.
After Verna repeatedly reported this code violation, the City finally filed a complaint against the servicer, and the servicer repaired the furnace. This ordeal, though, has exacerbated her health problems, and Verna has had enough: she is planning on taking her family and leaving Chicago altogether.
“Verna’s situation is not uncommon. LCBH regularly encounters tenants that are being forced out of their homes without proper notice, without due process and without knowing what their rights are and who to contact for help," says Mark Swartz, Legal Director at LCBH. "They are in living in units that are uninhabitable due to lack of maintenance or utilities and have to decide to stay and fight or move rapidly. Either way they are at risk of homelessness. All of this is happening extrajudicially and tenants are being taking advantage of at their most vulnerable.”
Despite legal protections in place for renters in foreclosed buildings, it’s clear that more must be done to enforce those protections and ensure that renters do not end up in dangerous living conditions. LCBH urges banks to abide by federal, state, and local laws protecting tenants in foreclosed buildings and to follow the report’s recommendations and work with LCBH, which is developing best practices for servicers working with tenants. LCBH also recommends that local, state, and federal governments devote additional resources to enforcing existing laws protecting tenants.
For more information about the report and to speak to tenants in foreclosed buildings, please contact Mark Swartz at (312) 784-3520 or mswartz@lcbh.org or Patricia Fron at 312-784-3505 or pfron@lcbh.org.
If you are a renter in a foreclosed building, please learn more about your rights and resources available to you in this brochure (Spanish, Polish) or on the Regional HOPI website.