Foreclosure cases topped 10,000 in the Baltimore metro area last year, up 50 percent from 2005, the last boom year. Statewide, foreclosure cases rose nearly 90 percent to about 25,000, court records show.
In a January study, the Mortgage Bankers Association found that one out of every seven Maryland homes that lenders began foreclosure proceedings on last summer was not occupied by the owner. That's nearly 900 properties. How many were occupied by tenants, no one can say, but "it's happening more and more," said Stephanie D. Cornish, program manager for the tenant-landlord counseling department at Baltimore Neighborhoods Inc.
"I don't know if it's the economy or people are buying properties and not looking at the bigger picture in terms of upkeep," she said.
With rare exceptions, renters have no legal right to continue renting after properties go to foreclosure auction, Cornish said. If the purchaser wants them to move, they have to do so, no matter how many months are left on their leases.
More than 80 tenants statewide called her group from January to April because their landlords were facing foreclosure, a 50 percent increase from the same period a year earlier. Cornish suspects there are a lot more cases she's not hearing about. Landlords occasionally call to say their tenants are sending them into foreclosure by failing to pay rent, but not nearly as often as tenants call about defaulting landlords.
To add insult to injury, some property owners continue collecting rent after the foreclosure auction, when they no longer have a right to do so, she said. That can go on for months as the new purchaser waits for court approval to take possession. To try to get that money and their security deposit back from uncooperative former landlords, renters have to turn to small claims court, Cornish said.
Janet Portman, an attorney and the managing editor at Nolo, a California-based provider of legal information and products, said it wouldn't be so bad for tenants if the new property owners let them keep renting. But in this market, the purchaser is often the lender. And lenders generally want renters out, she said.
"Somebody convinced those bankers of a completely counterintuitive proposition, namely the property you now own is going to be more valuable when it's vacant," she said. "Why they buy that, I cannot figure out. I've talked to banker types, and the only answer I get is ... `You know, we're bankers, we're not landlords.'"
