A renter's dilemma: Foreclosures can hit those who don't own

Foreclosure pits unwary against landlords, lenders

By J.N. SBRANTI
jnsbranti@modbee.com

last updated: November 18, 2007 09:28:57 PM

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It happened to Shari Torigian of Patterson three times in three years. Cheryl Vrba of Los Banos said it happened to her four times in four years. It is happening now to Alexis Grijalza of Modesto and her three children.

Renters are being forced out of houses every day in the Northern San Joaquin Valley after homeowners default on mortgages and lenders foreclose. The result often is financial hardship for renters who had no clue their shelter was in jeopardy.

"It is stressful. Where are we going to stay now? We have three kids, and my baby was just born Oct. 3," lamented Grijalza, who recently learned the Vernon Avenue house she's been renting for more than a year was repossessed by lenders.

The lenders insist she move, but Grijalza doesn't have a car or good credit. She's fearful she'll become homeless. To convince her to move out, the lenders offered to pay her $1,500 if she'd leave in two weeks.

That's called "cash for keys," a technique some lenders use to avoid the time-consuming eviction process.

Many home renters say such compensation doesn't begin to cover the cost or hassle of moving.

It's as good a deal as most renters can expect, however, because rental agreements are voided by foreclosure. Banks don't like being landlords, so they order tenants out.

Torigian can tell you all about it. She rented a Patterson home in 2004 from "the nicest people," only to get the boot by a bank eight months later. She moved across town into another rental house, but after several months she got suspicious.

"I asked the landlord, 'What's going on with all these notices from the mortgage company?' " Torigian said. She didn't get a straight answer, and before long that house was foreclosed on. Torigian didn't get her security deposit back, but she gathered enough money to move into yet another Patterson home.

One month after unpacking, Torigian said that house, too, was foreclosed on. Again her security deposit was not returned.

"You put almost $3,000 down sometimes (for first month's rent and deposit), then you've got to arrange for utilities and put deposits down on them. It's expensive," she said. "We're in our 50s, and we can't keep moving like this."

Renter insisted on 3-year lease

Before she rented another Patterson home, Torigian said, she checked the property owner's credit and references. She also researched public records about the home's ownership to assure it's not in the process of being foreclosed on.

Torigian said she also insisted the owner sign a three-year lease that guarantees all her expenses will be paid if she's forced to leave.

She's become an advocate for renters. Torigian said she cuts "Notice of Trustee Sale" listings out of newspapers and mails them to the Patterson houses facing foreclosure. She wants tenants to realize what's happening to the property they rent.

Landlords can't be trusted to tell tenants about financial trouble, warned Vrba, who's had to move four times because of foreclosure.

"Every time we have asked the owner: 'Are you sure you are going to keep this house?' And every time the answer is the same: 'Yes, we plan on keeping this house forever.' Forever has turned out to be, on average, 11 or 12 months," said Vrba, whose husband and son have health problems.

J.J. Martin said he and his family "almost ended up out in the street" after the Empire house they were renting was foreclosed on. Martin wasn't offered any "keys for cash" from the lenders that foreclosed, and the house's former owner didn't return his $1,050 security deposit.

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