Post-Foreclosure Evictions Haunt Some Renters
On June 15, the Chicago Tribune published an article titled Post-Foreclosure Evictions Haunt Some Renters.
Post-foreclosure evictions haunt some renters
Sealing of cases, stipulated by law, not consistent, leading to blemishes on credit records
The housing crisis caused thousands of renters to worry about their living arrangements as their apartment buildings went into foreclosure. But another worry may be their credit reports .
In 2008, Illinois passed a law ordering that post-foreclosure-related eviction cases be sealed, cases in which the tenant’s only fault was living in a building that went through foreclosure. That isn’t always taking place.
Even though the law took effect six years ago, it hasn’t benefited Janet Anderson. The Chicago resident is moving to a new rental unit, but it’s not her first choice. She scaled back her search because she knew there was an earlier foreclosure-related eviction case on her credit report .
Once the boxes are unpacked, Anderson plans to embark on the mission of getting the proceedings sealed and contacting credit bureaus to get the eviction — and more important, the stigma it carries — removed from her records.
“I thought this was over and done with,” Anderson said. “I’m a real decent, respectable person, but this has just been very taxing. I’ve really been trampled on.”
Post-foreclosure eviction actions are filed with county courts after a foreclosure case ends and the building’s ownership is transferred, typically either to a bank , Fannie Mae or Freddie Mac. During the housing crisis, owners frequently filed the eviction actions to empty a foreclosed building of tenants because otherwise the bank had to act as landlord.
An ordinance that took effect in Chicago last fall is expected to decrease the practice, but that offers little solace to the thousands of renters whose cases have not been sealed and are now blemishes on their credit records , often unbeknown to them, according to an analysis by Lawyers’ Committee for Better Housing, a Chicago advocacy group.
Cook County Judge E. Kenneth Wright Jr. acknowledged Thursday that sealing these cases — which are different from evictions for cause, such as not paying rent — should be automatic, but “sometimes things get through the cracks for one reason or another.”
In fact, in Chicago, many cases are falling through the cracks. Just last year, a year in which foreclosures dropped, more than 2,800 eviction cases were foreclosure-related, initiated by a lender, Fannie Mae or Freddie Mac. Less than half of them were sealed from public record, according to the Lawyers’ Committee for Better Housing.
Not having those cases sealed is an issue that affects all neighborhoods, socioeconomic levels and segments of the rental market, from units secured with the assistance of federal housing vouchers to individually rented high-rise condominiums. Whether the eviction is on a less-than-stellar credit report or an immaculate one, it can curtail a renter’s options when it comes to finding new housing.
The state law, adopted in 2008 and tweaked since then, generally calls for mandatory sealing of eviction actions brought against “an occupant who would have lawful possession of the premises but for the foreclosure of a mortgage on the property.” Foreclosure actions against building owners, however, remain open to the public.
Missing from the statute is who bears the burden of ensuring the case is sealed and at what point that should happen.
“A lot of cases are not sealed because there is no lawyer involved requesting it to be sealed,” said James Sojoodi, an attorney at Lawyers’ Committee. “The tenant is having problems because they want to look for a place to move, but they are getting rejected because they have a case showing.”
Some companies that offer tenant screening services include all references to evictions, regardless of whether there is a judgment, he added.
Landlords base their decision to rent to someone on several factors, but an eviction record in that person’s background “is definitely a big one,” said Edward Skoda, who works with landlords at the Spanish Coalition for Housing. “It’s really up to the landlord, but it is unfortunate. A lot of times that’s what they look for. (People) do get denied, and then they have to fix the problem. An eviction to a landlord is a big red flag.”
In California, post-foreclosure eviction cases are masked from public viewing for 60 days after the complaint is filed so as not to inhibit a tenant’s ability to find a home during the court process.
That type of policy might be something to consider locally, Wright said.
“We’re responsible for making sure justice is rendered when we see it,” Wright said, adding that when judges hear an eviction case, it should be determined whether it is the result of a foreclosure and if it is, the case should be sealed.
“Based on what (judges) told me, they may not be doing that in some instances,” he said. “Maybe a good thing we should do is seal them before they start.”
Going forward, post-foreclosure eviction cases may be less of a problem for tenants in Chicago because of the Keep Chicago Renting Ordinance, which took effect last fall. Designed to protect tenants and preserve the stock of affordable rentals within the city, the law requires an entity like a lender, Fannie Mae or Freddie Mac, that takes ownership of the property at the end of a foreclosure case to honor the lease of bona fide tenants until the lender sells the building to a third party. Otherwise, they need to make a $10,600 relocation payment per unit.
The ordinance won’t help renters like Anderson, who is dealing with the bad luck of having been a tenant in one of the thousands of rental units already involved in foreclosure proceedings.
“I still can’t wrap my head around all this,” she said.
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About Safeguard
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.
