Foreclosures Wiping Out One Entire Rental Neighborhood

In Visalia, California, The Fresno Bee reports:

• An entire neighborhood is vanishing by way of a little-known effect of the foreclosure crisis: owners of small apartment houses defaulting on their payments. Myrtle Court, a cul de sac near Demaree Road and Highway 198, is losing its residents as lenders foreclose on a string of attractive fourplexes built in the late 1990s and evict those living inside. Lenders have repossessed or in the process of taking back at least eight of the 12 apartment houses that occupy the block-long street, all from the same owner.

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• Increasingly, residents of duplexes, triplexes and fourplexes are being evicted because lenders that foreclose treat the buildings as residential property, not commercial, said Robin Kane, a Fresno real-estate consultant who is studying foreclosure trends in multifamily housing. Smaller apartment buildings can be purchased with the same kind of financing used to buy single-family houses, Kane said.

• A [California] state law passed in July requires lenders to give tenants 60 days' notice unless they agree to a cash-for-keys settlement, said Mona Tawatao, an attorney with Northern California Legal Services. Residents also should get their security deposits returned, she said.

For more, see Another door to foreclosure (Evictions at small Visalia apartment complexes are just one example of how rentals are vulnerable to the mortgage crisis).