Hidden Impact: California Renters in the Foreclosure Crisis

Renters in properties going through foreclosure are innocent and hidden victims of a foreclosure crisis they did nothing to create. Renters face many problems in these properties, everything from utility shut-offs to eviction and loss of security deposits. The stories are heartbreaking: seniors forced to live without basics like running water, rent-paying tenants evicted with little or no notice, and families pushed into homelessness for no good reason. Banks typically evict all residents after foreclosure. Thousands of renters are being driven from their homes so that properties can sit vacant.

The scope of the problem is staggering. Tenants Together conservatively estimates that at least one third of residential units in foreclosure in California are rentals. This means that more than 225,000 renters in California lived in properties that went through foreclosure in 2008 alone.

These figures understate the problem because they are based on data collected from county records. By
surveying callers to our Tenant Foreclosure Hotline, we found that many renters live in properties incorrectly labeled “owner-occupied” in the county-based data. The ‘at least one third’ estimate that we announce in this report appears to be just the tip of the iceberg. We are confident that further research based on actual property usage, as opposed to county records, will show a significantly higher percentage of foreclosed properties occupied by renters.

This report describes the scope of the problem, provides an overview of common hardships endured by
California renters in foreclosed properties, and proposes solutions. Among the various proposals, we note that “just cause for eviction” laws are a particularly effective and cost-free way to stop the unjust
displacement of innocent renters after foreclosure who seek nothing more than the right to continue living in their homes as rent-paying tenants.

ForeclosureReport.pdf709.93 KB

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