Borrowed Time

March 19, 2012

In South L.A., foreclosures hurt renters too

Renters aren't always immediately informed their unit has been foreclosed on. The original owner may continue to collect rent until the tenant receives a letter in the mail from the bank explaining the change of ownership. Photo: Nick Bastian/flickr

By Robert Fulton, California Health Report

Jesus Lopez is stressed out.

Lopez stands outside his small South Los Angeles apartment on a clear, cloudless California afternoon., his black-and-white tabby cat Sylvester encircling his legs. His home has been foreclosed upon and is now the property of U.S. Bank.

But the long-time South L.A. resident’s worry isn’t that his own personal American Dream of home ownership is threatened. No, Lopez is stressed because, like many in South Los Angeles, he rents. With his apartment now the property of the bank, Lopez doesn’t know what the future holds.

Lopez’s situation isn’t unique in a section of Los Angeles where, according to data compiled by the Los Angeles Times, as many as 80 percent of residents rent, depending on which neighborhood within South Los Angeles (according to a 2010 U.S. Census report, Los Angeles as a city averages 61 percent renters).

His foreclosure story isn’t that of an eager family getting a loan with an unmanageable mortgage, going underwater and failing to make payments. For the past two decades, Lopez and his family have lived in the apartment on West 42nd Street, across the street from Manual Arts High School, just south of Martin Luther King, Jr., Boulevard.

“I’ve been really stressed out,” said Lopez during an interview at the offices of Strategic Actions for a Just Economy (SAJE), a South L.A. community organization that assists residents with issues such as tenant’s rights. “The bank doesn’t tell you what they’re going to do.”

In running off a series of issues with his apartment, Lopez cites electric, plumbing, and infestation problems. He only recently had his water heater fixed. In the past weeks, Lopez has been forced to entertain a continuing parade of housing inspectors, occasional repairmen, and, now with the property on the market, prospective buyers.

“Every single time they send somebody else, you gotta go over the same thing over and over and over,” said Lopez, who is on disability and doesn’t work.

“I don’t know what is going to happen,” he added. “I hope they don’t come out the next day and say ‘look, you have to leave.’”

That scenario is unlikely, as Lopez benefits from rent control and has certain tenant rights that preclude him from being kicked out on the street. He said he’s been offered $9,000 by the bank to vacate. Lopez refused and asked for $18,000, and hasn’t heard back.

“We have a tenant rights clinic on Tuesdays, and nearly 20 percent of the cases we see for tenants rights are people living in foreclosed homes or buildings,” said Jyotswaroop Bawa, an Associate Director as SAJE.

According to Bawa, SAJE’s work primarily focuses on three zip codes in South L.A. – 90007, 90011 and 90037, the area Lopez lives.

Peter Enzminger, who along with Jasson Jacobsen, both graduate students at the USC Price School of Public Policy, compiled a spreadsheet of foreclosed properties in the 90007, 90011 and 90037 zip codes for SAJE. The documents lists more than 180 multi-family real estate owned (REO) units in those three zip codes. Hundreds more foreclosed properties are single-family homes.

“If you drive, you can see quite a few bank-owned properties,” Bawa said.

Renters aren’t always immediately informed their unit has been foreclosed on. The original owner may continue to collect rent until the tenant receives a letter in the mail from the bank explaining the change of ownership. Another telling sign is when utilities get turned off because the owner failed to pay the bills.

“Most of the time what we see is that the tenant knows nothing, absolutely nothing,” said Bawa, adding she knows of a building that has had its electricity off for four months. “They actually don’t realize anything is happening. The landlord will come and keep collecting rent, though the property has been foreclosed upon. Often we find the landlord, as soon as the property went into foreclosure or whatever difficulties, they stop paying utilities. So all of a sudden, these tenants who have been paying their rent on time, business as usual, find themselves in a place where they have no utilities and are in a place where they don’t know who their landlord is to talk to about this.”

“We find a lot of people are putting up with it,” Bawa added. “Moving is expensive,” with obligations like first and last month’s rent and a deposit.

In recent months, Lopez hasn’t paid rent. He doesn’t know who to pay it, and the bank hasn’t requested any.

“The banks don’t know how to manage property,” said Andres Ramirez, a SAJE tenant organizer.

One light at the end of the tunnel for folks like Lopez may be the work of Restoring Neighborhoods Los Angeles. Funded using Neighborhood Stabilization Funds from the U.S. Department of Housing and Urban Development, RNLA purchases foreclosed and abandoned properties, fixes them up, and resells them to qualified buyers. RNLA acquires both single and multi-family homes, primarily in South Los Angeles and certain neighborhoods in the San Fernando Valley.

When it comes to multi-family units, RNLA more frequently works with smaller two, three or four-unit properties. If a unit is still occupied, RNLA works with the tenant to find temporary housing. Once the apartment is renovated, the organization helps the tenant move back.

Prospective home buyers must not exceed 120 percent of area median income, and the homes must be owner-occupied. Families that earn at or below 50 percent of the area median income qualify to rent. RNLA also offers down payment assistance and gap financing.

“It’s really trying to keep the neighborhoods stabilized,” said RNLA deputy director Tim Piasky. He anticipates more foreclosed buildings to become available.

Piasky stresses the benefits of RNLA’s work: houses renovated, jobs created, homes for those who need them, and neighborhood stabilization.

“There’s always roadblocks,” Piasky said. “You’re dealing with real estate and you’re dealing with construction. There’s always things that come up. At the same time, you have government funding that you’re using, so you have all the hoops and hurdles you have to jump through.”

In the meantime, homeowners and renters in South Los Angeles sit and wait on an uncertain future. Folks such as Bawa would like to see banks do more.

“My sense of it is, a lot of banks and financial institutions received a lot of money in bailouts, and that money was specifically suppose to go to people who were struggling maintaining their mortgage,” Bawa said. “It’s interesting to me that banks are unwilling to work with the owners to help them maintain their properties.”

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