Agencies, new state laws boost help for renters stuck in foreclosed properties

After months of disruption caused by foreclosure proceedings on the house she rented, Yvette Blanton is getting a new lease on life -- and a new lease on a house in Northeast Minneapolis.
MinnPost photo by Bill Kelley
After months of disruption caused by foreclosure proceedings on the house she rented, Yvette Blanton is getting a new lease on life — and new lease on a house in Northeast Minneapolis. Next, community groups will help her refurnish the home.

In May 2007, Yvette Blanton put down a $1,500 deposit on a house rental in North Minneapolis. Money was tight, but she stayed current with her rent and kept her four children fed and clothed by working as a receptionist at a weight-loss clinic in Edina.

Blanton, 39, initially wasn’t concerned when the money order she mailed her landlord for rent was returned undeliverable late last year. At that point, the landlord started sending a messenger to pick up her payments. But several months later, when she returned home from work, she found a letter informing her that the house she was renting was heading into foreclosure.

So, she had planned to spend the next few months there while searching for a new place to live, as tenants have the right to do. But before she could find other accommodations, the electricity and water were shut off, forcing her to move early.

Rental foreclosures growing, though numbers are elusive
Blanton’s situation is not unique. She is one of many renters in the Twin Cities area who have fallen prey to the foreclosure issue through no fault of their own, according to several Twin Cities organizations. (Exact statistics are hard to come by, they say, because the homeless often come and go and frequently aren’t in a state of mind to share many details about their situations.)

The People Serving People shelter, for example, is serving 25 percent more guests today than a year ago — nearly 300 a night — for an average of 28 days at a time. Hennepin County’s contracted shelters saw a 43 percent increase in families signing up to use their shelters between January and April 2008, compared with a year earlier.

And Minnesota Housing conducted a six-week survey of seven shelters in six metro-area counties that found 23 percent of families reported that their homelessness had been affected by foreclosure in some way.

A study of several sources — including a state public assistance database, the Hennepin County shelter data files and the Hennepin County Sheriff’s foreclosure database — indicates that at least 6 percent of those families had lived in a home that is going through foreclosure.

The overall number is likely considerably higher, says Pat Mack, human services area manager with Hennepin County’s Human Services and Public Health Department.

That’s because the study only took into account Hennepin County records. For example, if a family in Ramsey County lived in a house that went into foreclosure but then contracted for temporary housing in Hennepin County, that wouldn’t show up in the records.

“This is a difficult number to get to,” she says.

Genevieve Gaboriault, staff attorney with the Legal Aid Society of Minneapolis, says nearly half of the foreclosures in Hennepin County have involved non-homesteaded properties, most of them rentals. She believes some landlords don’t inform their tenants of financial problems to ensure that rent checks continue coming, but she also thinks many of them don’t know the rules either.

“I think a lot of people just got in over their heads,” she says. “They thought it would be a good investment to buy an extra property. Values were going up and they thought they could refinance and they can’t anymore.”

Gaboriault says tenants with questions should call the Legal Aid Society or HOME Line, or other organizations that can help renters maximize their time and options.

That’s what Blanton did, seeking assistance from Section 8 Housing Choice and Minneapolis human services staff. As a result, she spent a week at an area hotel and then about a month at the People Serving People facility in South Minneapolis.

The shelter has everything her family needs — three meals a day, activities, private bathrooms and a place to sleep. But she’s required to be with her children at all times when they’re not at school, so she hasn’t been able to work. She’s had to give away most of the family’s possessions, and thieves have broken into her old rental house twice.

“I’ve lost everything,” she told me in a recent interview. “At first, I was getting depressed, upset, angry. Now it’s like ‘Well, I’m here. Nothing I can do about it. I can’t just walk out and leave because I have resources that can help me. I might as well stay and deal with it.”
 
Renters often unaware of their rights
Blanton was smart to seek assistance when she found out her landlord’s house had gone into foreclosure, but observers say many renters aren’t aware of the rights they maintain in such situations.

Often, the first they hear of a foreclosure is when they receive a notice that the house is going to be sold in a sheriff’s sale.

 “They have no idea that the landlord is behind money-wise or that there is any problem with the mortgage,” says Mike Vraa, managing attorney with HOME Line, a nonprofit tenant advocacy organization. “They freak out because this notice is very ominous looking. There’s a sheriff’s sale coming up, and the sheriff or whoever served them will often tell them, ‘You’ve got to go, you’ve got three weeks, that’s what you’ve got to do’ — which is completely incorrect.”

Even after a sheriff’s sale, tenants typically would have at least six months — the period when mortgage holders can redeem their properties — before being legally forced out of the house. During that time, even if the bank has bought the house back, homeowners still have the right, if they can, to catch up on payments, Vraa says.

“They have a right to be a landlord for six more months,” he says. “And in fact, the tenant still has the obligation to be a tenant if they had a written lease. It doesn’t go away because the sheriff’s sale occurred.”

Because such situations were a relative rarity, before he could give advice, Vraa says, he used to have to look up in a legal manual the rules regarding tenants falling victim to landlord foreclosures. In 2005, for example, HOME Line took 51 calls on foreclosure issues. A year later, there were 86. Then, from Jan. 1, 2007, through March 31, 2008, the number of calls mushroomed to 750. As of June, the number was on pace to hit 1,100 this year alone.

Legislation boosts protections for tenants
With foreclosures still on the rise, state legislators passed several measures last session aimed at fortifying tenants’ rights. Rep. Joe Mullery, DFL-Minneapolis, had commissioned five working groups to review issues surrounding foreclosure. One of them was a tenant group that proposed a series of bills that will improve the instructions and information tenants will receive when their landlords go into foreclosure. The new laws also provide the option of paying utilities so they can stay in their current rental properties as long as they are entitled.

Ron Ellwood, a staff attorney with the Legal Services Advocacy Project, says Mullery deserves credit for pulling together bipartisan support for the measures, which passed with virtually no opposition.

“Over the summer and through the fall, these groups met and developed these legislative proposals under his leadership,” Ellwood says. “I really think it’s important to note this.”

Those measures go into effect Aug. 1. The legislation passed too late to help Blanton, but things are looking somewhat better for her.

Despite her travails, she stayed positive for her family with support from friends at the Inner City Church of Minneapolis. She never thought she’d be homeless but also figures things could have gotten worse. One setback: Her boss had been holding her job open but eventually had to fill it, so she’s now back in the job market.

But she recently found a rental house in Northeast Minneapolis and moved in earlier this month.  Now, she and the children are sleeping on air mattresses, but several community organizations are helping the family get furniture and furnishings to replace her former possessions.

“I’m just thankful,” she says. “I’ve still got my health and strength.”

Andrew Tellijohn is a Minneapolis-based freelance writer who primarily covers business-related topics.

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