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Even renters who are paid up are getting kicked out

Some 40 percent of foreclosure-related evictions involve renters. Congress and 13 states weigh giving them greater protection.

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Mabel Cabrera is one of the renters who might be forced to leave town. She’s facing eviction for the second time in two years – both times because banks foreclosed on her landlords. For several months after the first eviction, she and her three daughters shared a single rented room. Now in a larger apartment, that building has also entered foreclosure.

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In mid-January, lawyers from HSBC Bank notified Ms. Cabrera that she had had 11 days to vacate the apartment.

As is often the case in such situations, the bank offered her “cash for keys”: $600 for leaving the apartment. But that won’t cover her moving costs, let alone the first month’s rent and security deposit for a new apartment, Cabrera says. In Providence, a typical two-bedroom apartment can cost $1,000 a month.

With the rest of her family in the Dominican Republic and her work hours at a cleaning company recently cut, Cabrera says she and her family will move to a homeless shelter if she is evicted.

To fight her eviction, Cabrera is working with the Rhode Island Bank Tenant Association and has written a letter to lawyers from HSBC Bank stating that she wants to remain in the apartment and pay rent. But the bank has not changed its policy, and Cabrera says a constable could come at any time and put her family’s belongings on the curb.

As her 13-year-old daughter does her homework at a desk surrounded by boxes and bags of the family’s possessions, Cabrera says, “The kids don’t understand. It’s so difficult to say to them, ‘We don’t have a house, but we have each other.’ ”

For her part, renter Watler does not understand the banks’ stance. “It just doesn’t make sense to me,” she says. “Why would [lenders] want these houses to just be abandoned?”

The answer is that evicting tenants is banks’ “default option,” says Alan Mallach of the Brookings Institution. But he, too, questions the wisdom of such a policy: “Not only in the sense that it’s bad for the community and the tenants. But it’s not in the lender’s best interest.”

How to stop the spiral
In New Haven, Conn., property values have declined by 50 to 90 percent in the neighborhoods hardest hit by foreclosure, says Amy Marx, a staff attorney with New Haven Legal Assistance, which works with many tenants of bank-owned buildings. She suggests that the best way to stop the downward spiral of property values is to let renters stay in their homes.

But lenders see vacating the buildings as a necessary step in getting the properties fixed up and resold, says Rick Simon, a spokesman for Bank of America. “We believe it’s better for the community to have the property prepared for resale as soon as possible,” he says. “It’s generally more effective to market a property that is vacant than one occupied by a tenant.”