Renters unwitting victims of foreclosure; ordinance aims to keep them in their homes

What happens when residential buildings fall into foreclosure because landlords fall behind on their mortgages?

Well, sometimes, instead of the landlords getting punished, the tenants do.

It’s a problem that The Chicago Reporter investigated back in 2008, when we found that thousands of Chicagoans were facing illegal evictions after their landlords failed to make payments.

The Reporter also discovered that small apartment building foreclosures were disproportionally occurring in black neighborhoods.

Four years later, the Lawyers’ Committee for Better Housing is drawing new attention to the problem, which hasn’t gone away.

In a three-year impact study released Tuesday, the nonprofit found that between 2009 and 2011, another 16,941 apartment buildings in Chicago fell into foreclosure. Austin and Humboldt Park topped the list of communities with the most foreclosure filings, according to the report.

Not only are certain areas hit harder than others, but the report said laws designed to protect renters are "routinely violated," and buildings seized by the banks usually have lousy management and often end up vacant--another major problem plaguing the city--further reducing the number of rental units at a time when such housing is increasingly scarce.

And unwitting renters are caught in the middle. More from the report:

The impact on individual renters is particularly acute since tenants are often unaware of the foreclosure action against their landlords, as they are generally not parties to the foreclosure, and landlords typically choose not to share this information for fear of losing rental revenue. Oftentimes, tenants only learn of the foreclosure after their landlord has already lost the building, and real estate or bank agents attempt to vacate buildings as expeditiously as possible. Unfortunately, the laws put in place to protect tenants in this situation lack meaningful enforcement mechanisms, and violations of renters’ rights occur unchecked.

On Wednesday, members of Chicago’s City Council will look more closely at the issue as a new ordinance, dubbed “Keep Chicago Renting,” is expected to be introduced by 33rd Ward Ald. Dick Mell of the Northwest Side.

Read a draft of the ordinance here.

He and a coalition of other interested groups will be holding a news conference Wednesday morning at 9:15 a.m. at City Hall.

The measure aims to keep properties occupied by requiring lenders to keep tenants in foreclosed units until the building is sold to a third party.

Daniel La Spata, the vice president of programs for the Logan Square Neighborhood Association, one of the key organizations supporting the ordinance, says the ultimate goal is to reduce the number of vacant properties in Chicago while keeping vulnerable renters in their homes.

By Safiya Merchant

© Community Renewal Society 2012

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    Aren't the current eviction rules already strong enough? Landlords have to jump through hoops to get non-paying tenants out of a property and then risk them damaging it on the way out. Most tenants know how to game the system and those who don't and are actually paying rent, most owners want them to STAY.

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