L.A. apartment building foreclosures rise

How foreclosures are affecting low-income renters comes from the Associated Press story datelined Los Angeles, "Renting families forced onto street as landlords lose apartments to foreclosure," at latimes.com:

The foreclosure crisis is hitting inner-cities hard as landlords default on mortgages in record numbers and foreclosures force tenants into the street. Boarded up apartment buildings have become common on impoverished city blocks while emergency shelters are swelling with mothers with children.

"The doors are busting down with people with this problem," said Mercedes Marquez, city housing general manager. "And the wave is still coming."

More on the national and local pictures:

While the nation's default rate on apartment buildings is still relatively low, it is rising quickly. Fannie Mae, for example, said its delinquency rate was 0.30 percent at the end of last year, double what it was at the end of September, and almost four times the rate at the end of 2007.

In Los Angeles, neighborhoods in the city's low-income south and central areas are being walloped.

In 2007, buildings containing a total of 1,690 apartments were foreclosed on. In 2008, owners lost buildings containing 4,789 apartments, according to the city housing department.

That's a lot of lost rental housing.

--Lauren Beale

Thoughts? Comments?

Photo: Anna Siciliano, right, closes her gate after her aunt, Maria Clemente, left, and her husband, Jose Clemente, moved their belongings into her garage in Los Angeles March 15, 2009. Clemente's daughter, Maritza Lopez, center, looks on. The couple's landlord lost their rental property in foreclosure. Credit: Jason Redmond / Associated Press

Comments

[monkeyboy]

I just bought one of those apartment buildings in a short sale. It seems that the same thing happened with apartment buildings as with SFRs. The prior owner of the building way overpaid with respect to market rents, and was assuming that appreciation would/might(?) bail him out.

[Laker]

That's a lot of lost rental housing.....

Lauren,
What do you think happens when a landlord loses a building to foreclosure.
The bank takes it, sometimes evicts the tenant sometimes not.
But after foreclosure they will sell the building and a new landlord/property management company will take over and fill the vacancies.
Most likely government will force them to make various corrections/upgrades to bring it to current code.
So after all that the net effect is at most 0. I don't see any reduction in rental housing...

[syscom3]

Under absolutely no circumstances should any apartment renter be evicted because the property owner defaulted on their loans.

In circumstances like this, people have a right to "squat" in the unused apartments. And if the banks dont like it, tough luck.

Wall Street has caused so many problems in the world right now, they have no justification in making a bad situation even worse. To hell with them.

And dont tell me its to tough for them to find a property management company to watch over things untill the building is sold.

[TX1]

Texans are afraid that Californians will move to Texas. Texans are already angry that Californians have "taken over."

[TakeFive]

Just scanned the article, but didn't see any mention of how tenants would find out if their building was subject ot foreclosure.

Maybe this is a database the Times could put on its website. Useful, and might drive some traffic.

[sfvrealestate]

Yup, this is one of the growing problems with the people-who-are-foreclosed-on-can-just-go-ahead-and-rent thinking. I think this is going to get worse in the middle-class areas, too.

[356man]

I have to ask if it is quite so simple for a potential buyer of these properties to "bring them up to code" without shelling out a fortune. Many of these units, if they're not ready to fall down, should be torn down. We have already read stories where foreclosed people are "doubling up" in apartments; what do you think that does to the normal wear and tear on plumbing, overworked electrical systems, etc. etc.? These people don't have any viable options. Perhaps converting them into co-ops where there's a chance that the places would be better maintained is at least an option to be considered; squatters aren't likely going to upgrade anything. An "owner" will since there's something in it for them.

[I Live in L.A., Too!]

I'll need to read up on this, but I thought the city of L.A.'s rent control ordinance also makes it onerous for new landlords to evict existing tenants. Why would this housing just disappear? Like Laker, I don't think it will.

[FreedomCM]

356man-

During the 80s, squatters took over a bunch of abandoned buildings in the E. Villiage of NYC and renovated them to code in exchange for getting them for $1 from the city, after the city took them over for unpaid taxes.

[blue]

50, 000 angry pissed off homeless gangsters ?

I see a riot coming to LA real soon and this time it will not stop in a week,

[Owl Creek]

Syscom, I agree, and although this article apparently focuses on apartment buildings (I haven't read the article yet), a LOT of people rent out SFH's and TH's...and a lot of them are being tossed out onto the street because their loser LL's were foreclosed on. They don't even get their security deposit back; the LL has already taken off by the time the sheriff comes to the door.

Laws need to be put in place to protect these tenants, who have done NOTHING wrong. Banks should not be allowed to just evict them without notice, and further, if the tenant can provide proof that they put up a security deposit (the rental agreement or a copy of the check), the bank should be forced to give them that money (then go after the deadbeat LL for it).

[syscom3]

Owl Creek, as long as the renters are paying their rent on time, then the dwelling is theirs until they move.

There is absolutely no social, economic or moral justification to evict people from rentals for any reason. I surely hope that the various local and state police agencies make it extremely clear to Wall Street, no one is going to lose their apartments because of an investor losing his property.

[356man]

FreedomCM: And...what was the result? Did it work out? What does the property look like now?

[tedson]

If you really want to know what's happening to this country read the last issue of Rolling Stone magazine. Wall
Street has bought off our politicians from both parties and is robbing this country into extinction. All the people running the government and Wall Street are personal friends.

[Cornelius]

In the city of Los Angeles, renters otherwise covered by the city's rent stabilization law (basically, renters of attached units in buildings built before 1978) have always been protected legally against eviction due to foreclosure on the landlord. Starting in December 2008, the city extended that protection to all renters.

http://lacountydca.info/tsRentersInForeclosure.html

If you are or know a renter who is being evicted by a lender who has taken back a property from the original landlord, the above link should be useful. It is not unheard of for new landlords, be they individuals or institutions, preying on renters' ignorance of their rights and sending them eviction notices even when they know full well that they have no legal right to force an eviction. Report the scumbag by calling the rent control hotline at (866) 557-7368.

[intheknow]

While I am empathetic to the some of the renters of these buildings many have stopped paying rent months ago.

Often the Rent Stabilization Board will put the properties in a program called REAP or Rent Escrow Account Program.

http://lahd.lacity.org/lahdinternet/REAPUMP/tabid/255/language/es-ES/Default.aspx

The purpose of the provisions of this article to provide a just, equitable and practical method, to be cumulative to and in addition to any other remedy available at law, to enforce the purposes of the Housing Code set forth in Section 161.102 and to encourage compliance by landlords with respect to the maintenance and repair of residential buildings, structures, premises and portions of those buildings, structures and premises.

Once in REAP the new owner or the bank must comply with all codes and ordinances often before the completion of the sale.

[MyLessThanPrimeBeef]

Does it apply to commercial renters as well?

Say, for example, an office leased by the US government from AIG goes into foreclosure, can Uncle Sam be evicted?