Communities of color are disproportionately impacted by foreclosures on rental buildings. The report finds that communities with more than ten percent of their rental units in buildings that are in foreclosure are almost all concentrated on the South and West Sides of Chicago. In communities like Englewood, East Garfield Park, and Avalon Park, nearly one in five rental units is in a building in foreclosure.
What does foreclosure mean for tenants? Tenants have a right to occupy the unit for the remainder of their lease under federal law (or if they don’t have a written lease, they have a minimum of 90 days to move after the court approves the foreclosure sale), but it doesn’t always work out that way. Servicers who take ownership of buildings sometimes try to force tenants to move before they need to leave by posting misleading notices or harassing tenants, who are often unaware of their rights to remain. The Lawyers’ Committee for Better Housing, which works with tenants to stop illegal evictions, documented instances of misleading and harassing communications:
Problems can arise even before a loan servicer takes possession of the building. Before the foreclosure is completed—which often takes more than a year—the original landlord is still responsible for maintaining the building and collecting rent. Sometimes, the landlord disappears and fails to perform those duties, allowing the building to fall into disrepair. After the servicer takes possession, it is required by law to take over the responsibilities of a landlord and notify tenants that the building has changed hands. In order to avoid those responsibilities, servicers often fail to notify tenants that there is a new landlord or tell them whom they should contact to report disrepair, pay their rent, or collect their security deposit. Tenants often continue to pay rent to a previous landlord and find that the servicer later tries to collect back rent. The result can be an uninhabitable, potentially dangerous environment for tenants who do not have the resources to find other housing.
One client of LCBH, Verna, found herself in this situation.