When landlords don't pay the mortgage, the tenants often suffer.
Monday, April 14, 2008
Nathan Hurst / The Detroit News
Waiting out the mortgage market meltdown by renting instead of buying is backfiring on some Metro Detroit families.
Renters are being ejected from homes owned by landlords now caught up in the state's foreclosure fiasco.
Leases protect renters from a bevy of unfair actions by their landlords. But when a property's mortgage or taxes go unpaid, those rights can be voided. In Michigan, as long as the home loan predates the rental agreement, the foreclosing entity -- be it bank or tax collector -- isn't required to honor the lease. In many cases, they're choosing not to.
Metro Detroit has been at the epicenter of the nation's foreclosure crisis. In 2007 alone, there were 61,031 foreclosure filings in Wayne, Oakland, Macomb and Livingston counties for all types of owner-occupied and leased properties, a 75 percent increase over the number seen in 2006.
The credit crunch is rippling out to tenants in dwellings from single-family bungalows to multiunit complexes, though data on the exact number of renters affected is scarce, analysts say.
Detroiter Charlene McKnight unexpectedly found herself looking for a new home when her landlord got behind on property taxes.
The mother of three and retired municipal worker moved into a three-bedroom home on Fairfort on Detroit's east side in late 2006. She wanted a place with a little more room, and the $700 monthly rent seemed reasonable.
For a year and a half, she always paid her rent on time and has the canceled checks to prove it. Then, in February, she arrived home with her children from running errands and found a foreclosure notice on her front door.
"I had no idea what it meant," McKnight said. She became suspicious, however, when some other neighborhood properties owned by the same man had similar notices on their front doors. Her landlord was behind on property tax payments owed to Wayne County not just on her home, but on more than a dozen others. Following legal advice, McKnight stopped paying rent and eventually leased a house a few blocks away.
McKnight's family was one of just hundreds in Metro Detroit removed from their homes after property owners failed to keep up on mortgage payments or property taxes in the past year.
According to data provided to by RealtyTrac, an Irvine, Calif.-based real estate information firm, there were 477 recorded foreclosure filings involving multifamily dwellings in Wayne, Oakland, Macomb and Livingston counties between February 2007 and February 2008, the most recent time period for which figures are available. The vast majority -- 437 -- were recorded in Wayne County, primarily Detroit.
That's only a fraction of the tens of thousands of foreclosures recorded in Michigan over the past few years, but even those numbers don't fully show the depth of the foreclosure problem for people who choose to rent their homes.
Tammy Chan, a spokeswoman for RealtyTrac, said the company's numbers don't include single-family homes used as rental properties, nor do they include large apartment complexes, the sales of which are sometimes recorded as commercial property. The data also don't include multifamily properties that may have been errantly labeled as another type when the sales were recorded.
David Lagstein, a community organizer with the Association of Community Organizations for Reform Now, or ACORN, in Detroit, said his office has been receiving more calls from renters not knowing what to do when a home's owner isn't fulfilling his or her financial obligations.
"For many of them, it's a surprise," Lagstein said. "It's a very rude wake-up call for people, and there are very few options for families that find themselves in this situation."
Low-income housing advocates suggest renters check up on the landlords before they move in. Unless a landlord is particularly forthcoming, it's difficult for renters to know whether a mortgage is in foreclosure. But they can check tax records to make sure those payments are up-to-date.
Still, even a seemingly together landlord can deceive.
Jeanne Dunne moved into her three-bedroom home on Griffith in Berkley in June, thinking it could be her new permanent residence. It was just across the street from her mother-in-law's house and sported lots of floor space and a basement, perfect for visits from her stepchildren.
Dunne and her husband initially thought about buying the home, given its good location. They figured they could get a good price by waiting out the market, and they also liked the idea of trying the house out before they bought it.
But then an unwelcome surprise was affixed to her front door.
"It was a foreclosure notice," she said. "It said we had to leave."
The family's lease is up May 31, and Dunne said she's ready for a new place. She'll miss the convenience of being near family, she said, but won't miss the hassle of living in a house in foreclosure.
"We're getting tons of mail for" the landlord, Dunne said. "They just assume he lives here, even though he doesn't. I can't wait until I don't, either."
Monday, April 14, 2008
Nathan Hurst / The Detroit News
Waiting out the mortgage market meltdown by renting instead of buying is backfiring on some Metro Detroit families.
Renters are being ejected from homes owned by landlords now caught up in the state's foreclosure fiasco.
Leases protect renters from a bevy of unfair actions by their landlords. But when a property's mortgage or taxes go unpaid, those rights can be voided. In Michigan, as long as the home loan predates the rental agreement, the foreclosing entity -- be it bank or tax collector -- isn't required to honor the lease. In many cases, they're choosing not to.
Metro Detroit has been at the epicenter of the nation's foreclosure crisis. In 2007 alone, there were 61,031 foreclosure filings in Wayne, Oakland, Macomb and Livingston counties for all types of owner-occupied and leased properties, a 75 percent increase over the number seen in 2006.
The credit crunch is rippling out to tenants in dwellings from single-family bungalows to multiunit complexes, though data on the exact number of renters affected is scarce, analysts say.
Detroiter Charlene McKnight unexpectedly found herself looking for a new home when her landlord got behind on property taxes.
The mother of three and retired municipal worker moved into a three-bedroom home on Fairfort on Detroit's east side in late 2006. She wanted a place with a little more room, and the $700 monthly rent seemed reasonable.
For a year and a half, she always paid her rent on time and has the canceled checks to prove it. Then, in February, she arrived home with her children from running errands and found a foreclosure notice on her front door.
"I had no idea what it meant," McKnight said. She became suspicious, however, when some other neighborhood properties owned by the same man had similar notices on their front doors. Her landlord was behind on property tax payments owed to Wayne County not just on her home, but on more than a dozen others. Following legal advice, McKnight stopped paying rent and eventually leased a house a few blocks away.
McKnight's family was one of just hundreds in Metro Detroit removed from their homes after property owners failed to keep up on mortgage payments or property taxes in the past year.
According to data provided to by RealtyTrac, an Irvine, Calif.-based real estate information firm, there were 477 recorded foreclosure filings involving multifamily dwellings in Wayne, Oakland, Macomb and Livingston counties between February 2007 and February 2008, the most recent time period for which figures are available. The vast majority -- 437 -- were recorded in Wayne County, primarily Detroit.
That's only a fraction of the tens of thousands of foreclosures recorded in Michigan over the past few years, but even those numbers don't fully show the depth of the foreclosure problem for people who choose to rent their homes.
Tammy Chan, a spokeswoman for RealtyTrac, said the company's numbers don't include single-family homes used as rental properties, nor do they include large apartment complexes, the sales of which are sometimes recorded as commercial property. The data also don't include multifamily properties that may have been errantly labeled as another type when the sales were recorded.
David Lagstein, a community organizer with the Association of Community Organizations for Reform Now, or ACORN, in Detroit, said his office has been receiving more calls from renters not knowing what to do when a home's owner isn't fulfilling his or her financial obligations.
"For many of them, it's a surprise," Lagstein said. "It's a very rude wake-up call for people, and there are very few options for families that find themselves in this situation."
Low-income housing advocates suggest renters check up on the landlords before they move in. Unless a landlord is particularly forthcoming, it's difficult for renters to know whether a mortgage is in foreclosure. But they can check tax records to make sure those payments are up-to-date.
Still, even a seemingly together landlord can deceive.
Jeanne Dunne moved into her three-bedroom home on Griffith in Berkley in June, thinking it could be her new permanent residence. It was just across the street from her mother-in-law's house and sported lots of floor space and a basement, perfect for visits from her stepchildren.
Dunne and her husband initially thought about buying the home, given its good location. They figured they could get a good price by waiting out the market, and they also liked the idea of trying the house out before they bought it.
But then an unwelcome surprise was affixed to her front door.
"It was a foreclosure notice," she said. "It said we had to leave."
The family's lease is up May 31, and Dunne said she's ready for a new place. She'll miss the convenience of being near family, she said, but won't miss the hassle of living in a house in foreclosure.
"We're getting tons of mail for" the landlord, Dunne said. "They just assume he lives here, even though he doesn't. I can't wait until I don't, either."
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