Find a new home or apartment
If only someone would take Tracie Tyler's money.
It's been nearly six months since anyone has accepted her rent, or a check from any of the other tenants at the Boston triple-decker, which was foreclosed on last summer.
"We don't want to stay here and not pay anything," Tyler says. But with no one to send checks to and nowhere to go, the residents have become squatters in their own homes.
They're hardly alone. Scattered throughout the country are renters and owners stuck in a bizarre housing limbo: foreclosed on yet not evicted, ousted on paper yet physically and often legally allowed to remain.
"The system is just overwhelmed right now, basically," says Rick Sharga, a spokesman for foreclosure-tracking site RealtyTrac who has been hearing more of these tales lately from mortgage companies struggling to keep up.
Foreclosure is only the beginningAt the extremes of the real-estate meltdown, business is so far from normal that there's no road map at all. In Orange County, Calif., for instance, banks seem overwhelmed, says Leland Hill, a residential and commercial appraiser in Santa Ana.
"A friend of mine thought he lost his home to foreclosure," Hill says. "The bank sent notice. They told him to move out. He moved out. But the foreclosure sale never took place. It was set for July; then it was reset to October. They never followed through with it.
"He asked me what to do. I told him, 'You might as well move back in because they'll have to start the notifications all over again.' I think it's just a product of them being so overwhelmed."
Lenders won't discuss how many people are living in this eviction limbo, and the stories of those nervously awaiting the boot remain largely out of public view, for obvious reasons.
But what these people do matters -- to everyone, housing advocates says.
When occupants are forced out -- and homes are vacated in large numbers -- it triggers a downward economic cycle: The value of nearby property drops, neighbors lose equity, people spend less, towns and businesses lose income, jobs get cut, more foreclosures occur, property values drop again . . . and so on.
"It becomes a death spiral," says Daniel Alpert, the managing director of investment bank Westwood Capital and the author of a plan to keep foreclosed owners put. "All of these things have an enormous lagging impact."
Eviction costs everyoneIn response, advocates have begun in earnest the battle to fight eviction -- on paper, in court and even on the street, where protesters are staging eviction blockades reminiscent of the citizen resistance movements of the 1930s.
"Foreclosure is not the end of the process; it's the beginning of stage 2," says Steve Meacham, a community organizer with City Life/Vida Urbana, a nonprofit that has orchestrated 11 blockades in Boston recently, nine of them successful.
The traditional post-foreclosure trip goes one way: If you don't pay, you don't stay. But this route appears overwhelmed by the magnitude and complexity of the housing crisis. And it could prove harmful even to those who have paid their bills.
Take the case of Kevin S. The middle-aged construction-industry worker bought a small house in Detroit in October 2006 with no money down. He also had no emergency funds tucked away. When his hours were reduced, he missed three payments, and the bank foreclosed. He says the bank rejected any installments and instead demanded the full $68,000 he owed.
As a result, Kevin hasn't made a payment since April 2007.
"It was my understanding that six months after the sheriff's sale, I'd be thrown out," he says. Though he hasn't been, his neighbors have. "The anxiety is just overwhelming."
Kevin adds: "When I came back from work, all their stuff was in the Dumpster, and a little red-and-white letter was in the window -- 'evicted.' The next day, they were gone, too. As a matter of fact, the letter is still in the window."
Kevin doesn't know why he's hasn't gotten locked out, and he's not about to call his bank to ask. Nor is it an issue that lenders discuss publicly, which leaves others to speculate.
Eviction is expensiveMany attribute the unusual circumstances to an industry that is simply overwhelmed, processing 1 million or more foreclosures this year alone. Gumming up the works are extra and inexperienced clerical help, backed-up housing auctions and a less-than-motivating sales market.
"My suspicion is there's no money out there," says Anne Omura, the executive director of the nonprofit Eviction Defense Center in Oakland, Calif. "It's a weird situation. The market's collapsed, and there's no Realtor rushing over there to flip it."
Evictions also cost money (banks have paid as much as $20,000 to families to move rather than fight eviction). As owners, banks are liable for the buildings, and there's often less opportunity for damage if buildings are occupied.
"To spend their energy on trying to evict people isn't necessarily the first thing they're going to do," says Gihan Perera, the executive director of the Miami Workers Center, which is helping tenants remain after foreclosure. "So we know people who have just stayed, who've been around for six, nine months."
People like Kevin S., who fail to meet their financial obligations, might not evoke sympathy. But housing advocates say the issue has moved well beyond personal recrimination.
First, an estimated 40% of those facing eviction nationwide, and 70% in some cities, are renters who paid their bills. Their landlords, without a word to anyone, did not.
"It's ridiculously common," Omura says. "They're hard up for money, and the tenant is still paying, so they're just taking it. The renters only hear about it at eviction."