Federal law gives rights to renters: Banks hide details during foreclosures
November 8th, 2009
Mary E. O’Leary
WEST HAVEN, Nov 08, 2009 (New Haven Register – McClatchy-Tribune Information Services via COMTEX) –
Robert Boyd has had a lot of bad news this year.
A driver for a charter bus company, he has been unable to work since his prostate cancer metastasized to Stage 4 bone cancer.
The only good news was the location of the new apartment he and his wife moved into in May, which is about a block from the Veterans Affairs medical center, where he is being treated.
Then, in July, a bright orange sticker slapped on his door told him a bank owned his apartment. A follow-up letter implied he had three months to find another place to live, even though his lease didn’t expire until May 2010.
Boyd, 61, and the other tenants had done nothing wrong. His landlord, the owner of the multifamily house at 9 Abner St., had defaulted on the mortgage and the bank had begun foreclosure proceedings, unbeknownst to the tenants.
The Boyds and the residents of two other floors were about to experience the deteriorating housing market up close. Though a federal law adopted in May gives them new protections, misleading communications had them all preparing to move out early.
“The tenants are the innocent victims in the foreclosure crisis,” said Amy Marx, a New Haven Legal Assistance Association housing lawyer who contacted the three families at 9 Abner St. after she found the property listed in foreclosure filings in New Haven housing court.
The federal Protecting Tenants at Foreclosure Act, which was adopted in May, “was a complete game changer for renters,” Marx said. Before this, a foreclosure discontinued the lease and tenants lost the right to stay in their homes.
With foreclosures estimated to reach 3.5 million this year in the country and towns in Greater New Haven hit hard, Marx said the protections are more important than ever, but instead “it’s as if nothing has changed.”
In July, the orange sticker Boyd found on his front door only said an unnamed band was the new owner and tenants should contact a local Realtor.
It turns out that the owner is Deutsche Bank, the German financial giant which has taken $11.8 billion in U.S. bailout money through payments from AIG. Under investigation in Florida for alleged illegal foreclosures, it has been sued by several communities for failing to maintain properties and contributing to blight.
BAD FAITH
“It’s really hard for me to relocate now,” Boyd said in an interview in his apartment as he negotiated the small rooms with crutches, his ankle in a cast after multiple falls.
The East Greenwich, R.I., law firm of Marinosci, Ceritto and Shapiro is handling the property for Deutsche Bank. A July 13 letter to the tenants gave them two days to get in touch to discuss possible monetary help in relocating or the firm would initiate legal action to evict them.
Subsequent legal filings consistently misspelled the street name and cited Virginia law for the basis of their actions; one tenant was given six days to leave, while the Boyds got three months, and it was unclear what communication took place with Ramon Ayala, who lives in a basement apartment.
Buried within the legal “notice to quit” document sent later is a reference to leases. If the tenants in fact have them, they are entitled to stay until they expire.
Marx said all three have leases, but the importance of those arrangements was not explained to tenants and all were preparing to leave. Also, the $1,600 “cash for keys” offer to the Boyds was $400 less than the minimum required by state law.
Marx has paperwork showing the leases with two tenants and plans to present other documentation to the court to prove the Boyds have a lease through May 2010.
Marx said the July 13 letter, which was signed by “evictions team lead” Daniel J. Lailer of the Rhode Island firm, “is an outright violation of the tenant act.”
The 48-hour request to respond “implies that choosing the cash for keys is their only option. This letter unfairly and deceptively pressures them to move. If I received it, the first thing I would do is cry and the second thing would be to pack my bags,” she said.
“The bank and the law firm have the absolute responsibility to clearly tell the tenants in all communications that they get at least 90 days before an eviction will begin,” Marx said.
The three months kick in after a lease expires, she said, and often the court gives a longer time period.
The eviction notices from the law firm also were incorrect under Connecticut law, Marx said. They did not list any of the four reasons permitted to evict a tenant.
Lailer would not comment on the case, saying he was a paralegal for the firm, despite the title “head eviction lead.”
In an unusual move, state Superior Court Judge James Abrams rejected the six-day eviction notice even before Marx and her colleagues had a chance to get involved in the case.
A CRISIS
The national foreclosure crisis has significant resonance in Greater New Haven. Foreclosures in the city increased from 534 in 2006 to 939 in 2008, with vacant properties as of February totaling 790 homes.
Deutsche Bank has been the plaintiff in 1,013 foreclosure cases in New Haven County since 2002, with about half filed in 2008-09 and 188 leading to evictions, according to court records.
From June until Oct. 2 this year, there were 120 foreclosures in New Haven, 82 of them, or 68 percent, involving multi-family homes. Extrapolating this rate through the end of the year, Marx said there could be as many as 328 multifamily houses in foreclosure by January.
Marx said some banks are doing a good job of clearly notifying tenants of their rights.
Scott Helfman, a spokesman for Deutsche Bank, said “Deutsche Bank National Trust Co. does not maintain an interest in the loans or properties in the transactions,” adding that the servicer is responsible for the sale of properties.
The servicing company for 9 Abner St., Saxon Mortgage Services, failed to answer questions sent by e-mail, but it’s a group that has been in the news. A recent analysis of servicers by Credit Suisse Group rated Saxon last in modifying mortgage loans and said it was badly understaffed to handle the 300,000-plus loans they were responsible for as of 2008.
Marx said banks will often tell her to talk to the servicers, but she argues banks ultimately have the responsibility to get things right.
“They (banks) are responsible to the shareholders for the value of the trust asset and the evictions are brought in their name,” she said.
She also had a different perspective on the issue in light of billions given to banks as part of the federal bailout program.
“The banks should think about the tenants in terms of the bailout legislation. They have taken a ton of money out of the taxpayers’ pockets. Given that the tenants are also taxpayers who are paying the bill to bail them out, the least the banks can do is pretend to care about them,” she said.
The bigger picture for the legal aid attorneys is to try to persuade banks to allow tenants to stay until properties are resold. Fannie Mae and Freddie Mac, the large government lenders, now do this as one way to try to stabilize neighborhoods hit hard by foreclosures.
Properties that are emptied of tenants, which could be a source of income to banks, are often vandalized, which in turn depreciates the value of neighboring properties. “It is devastating for a city like New Haven,” she said.
Ayala, who is an out-of-work plumber nearing the end of his unemployment insurance, was grateful for legal aid attorneys for reaching out to him and other tenants. He now feels he can stay at 9 Abner St. until spring.
“I didn’t want to come home some day and find all my belongings in the street,” he said.
To see more of New Haven Register, or to subscribe to the newspaper, go to
http://www.nhregister.com. Copyright (c) 2009, New Haven Register, Conn.
Distributed by McClatchy-Tribune Information Services. For reprints, email
tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax
to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave.,
Suite 303, Glenview, IL 60025, USA.
Categories: Insurance Headlines | Tags: Federal law
coffee
