Another Wrinkle in the Foreclosure Crisis?

Guest post and photo by the Hawthorne Hawkman

When you hear about something once, it's chance; twice could be a coincidence; but a third time and you start to wonder if there's a larger pattern. And now I'm starting to see a pattern with foreclosures in north Minneapolis. Landlords with properties in foreclosure are consistently renting out their properties to new tenants in between the sheriff's sale and the end of the redemption period. And surprise, surprise, the tenants aren't being made aware of the status of the house or apartment their renting.

Okay, so that's not REALLY new; that kind of behavior has been going on long enough that Minnesota has passed some tenant protections as a result. What IS new (to me), however...

...is that many of these landlords are receiving money from tenants using emergency assistance. Maybe I and others should have seen this coming a long time ago. After all, some residents of the apartment complex of anarchy told a similar story in the summer of 2008.

I was told then that the owner at the time, Shirley Guevara, went to homeless shelters and picked up people to come live in her two buildings, 3101 6th St N and 3115 4th St N. She did this post-sheriff's sale, but prior to fully losing her home to foreclosure. The people she got to live in her units were on public assistance and emergency funds were used to help pay their rent and deposit. Then, when they were evicted (and given plenty of warning), many no longer qualified for the very assistance that would have helped them in the first place.

And who wound up pocketing these public funds? That's right, the Mystic Lake Casino. But first, Shirley Guevara had the money for a little while.

Borrowing from Jonathan Swift, "I never wonder to see men wicked, but I often wonder to see them not ashamed." So it should come as no surprise that this slummy behavior has been repeating itself.

(a quick mortgage primer: once a mortgage goes delinquent enough, then the bank holds a sheriff's sale at the county. Prior to that sale, the mortgage can be reinstated, rewritten, or otherwise brought current. After the sheriff's sale, there is a period of time - usually six months - where the owner typically has two options, pay off the loan entirely or lose it to foreclosure. As Rosemary Williams and her supporters found out, there is virtually no chance of saving a home post-sheriff's sale.)

So a tenant using emergency assistance to rent from a landlord who is delinquent on a mortgage PRIOR TO the sheriff sale could be a win-win situation that gives someone a home and provides much-needed income to stave off a landlord foreclosure. But post-sheriff sale, that tenant will likely be evicted by a mortgage company and will never get their security deposit back.

I saw this happen to a family in the fall, and then yesterday I was at an NCRC meeting with an aide from Senator Klobuchar's office. During that meeting, E.B. Brown, who works at Oasis of Love in Hawthorne, mentioned that she was dealing with SEVERAL families in this very situation. One family had moved FOUR TIMES in the past year because of landlord foreclosures.

This is traumatic enough for a family to have to endure even once, but gets compounded when we find that public dollars are supporting foreclosed landlords. I've brought this up to various elected officials and public servants and I'm told we do have systems in place to try and prevent this very issue. That's more encouraging than if we weren't doing anything about it, but things are still slipping through the cracks.

This is your money and my money that is being spent to support landlords in foreclosure, and not in any way that meaningfully addresses the problem. How much money did Danna D III or Gregge Johnson skim off of their properties during the redemption period? How many other slumlords are out there doing this? How much public assistance money is being thrown at these no-accounts?

If you're reading this and you think or know your landlord may be in foreclosure, contact the Legal Aid Society of Minneapolis. I'm hoping to work with partnering agencies to understand the scope of the problem, and then with our public officials on an appropriate remedy. In the meantime, I want names. If your landlord is doing this, post information on this blog or contact John Hoff or myself (jskrenes@hawthorneneighborhoodcouncil.org). We need to put a stop to this, and call out landlords who are using our tax dollars to prey on the most vulnerable among us.