Home Front: Sacramento-area renters suffer from foreclosures

The Mortgage Bankers Association says nearly one in five California homeowners who descend into foreclosure is an investor who typically doubles the trouble by displacing renters.

Exhibit A for the shock and disruption are Kyla Salazar-Thompson and Mike Kennedy of Elk Grove. They are renters who already have their hands full with work, school and December wedding plans. Now, they have to move for the second time in six months.

And let's not forget to mention what this does to their wedding RSVP envelopes. They're all addressed now to the house the two must leave. Add $100 for new ones to the chaos.

The couple seem to have a unfortunate knack for finding homes where a Bay Area owner stops paying the mortgage. Booted unexpectedly from one foreclosed rental in February, the two moved March 1 into another where the owner now is in financial trouble.

Speaking for an entire group of renters being blown about in the foreclosure storm, Salazar-Thompson says simply: "There are other victims of the housing crisis than homeowners who are losing their houses. It's happening to us, it's happening to others."

There is Daniel Carter of Sacramento, who needs a place immediately for himself, a girlfriend and two dogs after his landlord stopped paying the mortgage on the house they were renting. Carter can't even get his $1,600 deposit back after signing a year's lease last December.

He says the landlord apparently spent it and had already defaulted in August, months before he signed a lease.

"The bank is giving me $1,000 if I move in two weeks, by the 23rd," he says. "The pet deposit alone is $500 in most places."

State law gives most renters 30 days to move. But banks often dangle "cash for keys" to move them along sooner.

It's become enough to make renters wonder who should undergo a tougher screening process, them or landlords. Salazar-Thompson, a center support coordinator at DeVry University's Elk Grove campus, says renters have to undergo credit checks and prove their worthiness to society before they're accepted as tenants. Landlords, meanwhile, just have to sign up with a property management firm.

There are no laws that require property managers to dig deep into the finances of someone who owns a rental. There is no requirement for owners to tell a property manager that they're stumbling toward foreclosure. There's good reason not to.

"If we recognize it, we don't take on the account," says Bruce Mills, owner of Sacramento-based M&M Properties.

More and more, property managers say they are getting calls from surprised tenants asking about the for-sale sign out front or the visit from a real estate agent representing a bank.

"We're always the last to find out," says Debbie Reimche, co-owner of Elk Grove's Realty Roundup Inc. Her firm manages the house rented by Salazar- Thompson and Kennedy, a firefighter and emergency medical technician.

She says the firm persuaded the owner to cancel its lease with the couple and says it withheld $400 from this month's rent to help the two with moving expenses. But imagine asking friends and co-workers to volunteer again.

"People go, 'You're moving again?' " Salazar-Thompson says.

Yes, they are, because their neighborhood is part of the classic Elk Grove housing boom. Atlanta-based Beazer Homes sold the house in June 2005 for $393,500. Now it's worth $281,000, according to the real estate Web site Zillow.com.

On the street you don't have to look far to see several overgrown lawns that indicate vacant properties likely headed back to banks.

Salazar-Thompson and Kennedy aren't wild about moving into an apartment complex this time. But they probably will.

"You know you will be there for a year at least," Kennedy says.

Maybe, just maybe …

There's one word for March sales of new homes in California compared with the same time last year: lousy.

But there is a bright side, the California Building Industry Association says. Its analysts believe the numbers point to a bottom for the market.

For three straight months the pace of decline in year-over- year sales has slowed, they say. Sales also rose again as they are supposed to from February to March, unlike last year when they declined.

This suggests the "market may be bottoming out," said Jonathan Dienhart, research director at Costa Mesa-based Hanley Wood Market Intelligence. The firm compiles statistics for the CBIA, a statewide home builder trade group.

Dienhart, while saying the market may see bottom this year, cautioned against expecting an "immediate" path to recovery.

"With challenges in the broader economy, the housing market will likely take longer than expected to start recovery," he said in a statement. "A return to more traditional housing- demand drivers means we'll need job growth and positive economic trends to see substantial improvements in the building industry."

Honoring a helping hand

Hats off to retired Carmichael attorney Ralph Livingstone, recognized nationally last week for some of the hardest volunteer work there is. He helps older people facing foreclosure, often after being scammed by predatory lenders.

Livingstone, who volunteers with the Sacramento Senior Legal Hotline run by Sacramento Senior Legal Services, was one of 25 U.S. residents to receive Metlife Foundation Older Volunteers Enrich America Awards.

Livingstone practiced law for the California Department of Transportation and privately for 45 years before volunteering at the senior legal hotline in 2000. Since the beginning of 2007, he has put in 1,000 hours volunteering as the housing crisis has grown, said David Mandel, supervising attorney for Sacramento Senior Legal Services.

About the writer:

• Call The Bee's Jim Wasserman, (916) 321-1102. Read his Home Front blog at www.sacbee.com/blogs.