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Shadow Victims Of The Mortgage Crisis: Renters (Chance Of Greener Pastures For Investors?)
LAT ^ | February 13, 2008 | David Lazarus

Posted on 02/13/2008 7:29:48 PM PST by fight_truth_decay

Salgado, 40, one of many renters who found themselves homeless after their cash-strapped landlords stopped making mortgage payments and their houses or apartment buildings were foreclosed upon.

The California Apartment Assn. estimates a quarter of all foreclosed single-family residences are occupied by renters.

This "shadow market" of renters isn't being tracked by organizations that compile statistics on established rental properties.

Salgado, works as a service manager at a San Bernardino boat dealer. He returned to his rented Hesperia house 1/23 to find a notice from his property manager, Century 21 Fairway Realty, informing him the property had been foreclosed upon.

The notice offered an "assistance check" in the amount of $1,250 if Salgado agreed to get out of the house by Feb. 5.

Salgado was told by Century 21 that if he didn't agree to the deal right away, his resettlement money would be slashed to $750 within a week and then to $500 a week after that. "Then it would drop to nothing.." "I felt very pressured," Salgado agreed to the $1,250 payout and moved himself, his two kids -- ages 2 and 3 --to a nearby motel. His dog and cat were put in a kennel.

Salgado said he was told by Century 21 he'd receive his check right away.

No check arrived. As days in the motel passed, Salgado said he quickly ran out of money. He moved his family and pets to his mother's Beverly Hills apartment this week. He has to commute about 150 miles a day to and from work.

A spokeswoman for Century 21 said Tuesday that she expected Salgado to receive his check by the end of the day.

Salgado said he hoped that once he got his check, he'd be able to relocate his family to a new home in Hesperia.

(Excerpt) Read more at latimes.com ...


TOPICS: Business/Economy; Extended News; Government; News/Current Events
KEYWORDS: ca; foreclosures; green
Does "shadow market" really describe rental properties for investment that suffer in the shadows of foreclosures? or is there some parallel montage in this monikered phrase: "in the shadows" that politicians like to plead out on the humanitarian issues dealing with immigration.

However, is what quietly awaits in the shadows really a new Green Investment Machine? Maybe Mr. Salgado should see a property as a "green" potential with the government offering some extra back scratching?

Not long ago, the thought of going green was, as Norm Miller, director of academic affairs at Burnham-Moores writes:

“The added value of the real estate is now exceeding the extra costs associated with going green." “I couldn't have said that five years ago..and the costs are getting cheaper.” "Just how much are those costs? Miller estimates that it takes between 1 percent and 8 percent of a building's total cost to turn it green – a range that depends on how green you want it..costs based on retrofitting buildings."

With the real estate market in a big decline in many overbuilt real estate markets, foreclosures due to exortic morgages, does a greener opportunity suddenly arise? With Presidential hopefuls singing for more green incentives -" geothermal earth, wind and solar "- will foreclosures be acquired by "green thinking" homeowners and developers aware cities have now officially committing themselves to the Green Building Initiatives. LA has a goal of reducing energy use in public and private buildings to 20 percent below 2003 levels by 2015.

The U.S. Government has accepted and approved new green inspired technology, a favored offspring out of the woes of high oil prices. One might suggest a convenient drop in the real estate market-California where the sun is good n' plenty a chance for a modern day Gold Rush speculation. Senator Clinton promoted 50,000 new Green Collar jobs while campaigning in Maine. Foreclosures may be a curse to present owners, but a Godsend for green thinking entrepreneurs and/or investors. The first most noticeable step came with the IRS offering a consumer tax credit for homes and businesses installing some form of energy efficiency under the approved Energy Star ratings.

Stephen Kapp, who chairs the advocacy committee of the local chapter of the Green Building Council, say he is "optimistic about expanding the use of green technologies, especially in the largely untouched residential market. The Green Building Council just came up with LEED standards for homes in December and Kapp hopes to see some of (more) green principles put into action".

Convenient timing, I might add.

I noticed the Solar and Renewable Energy Stocks had some nice jumps said to be 500% for some since this time last year and positive speculative growth potential in the future.

Video: http://www.greenchipstocks.com/videos/cnbc-green-week

Reminds me of the Internet TRADING ON WALL STREET age when stocks pumped and dumped on anything to do with Al Gore's new driven informational technology-the Internet. The Wall Street machine has bulldozed through the SubPrimes and now seemed focused on anything Green.

Re: Nanosolar, Geothermal, GreenPower


1 posted on 02/13/2008 7:29:58 PM PST by fight_truth_decay
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To: fight_truth_decay

A twisty thing that is happening in many of these cases is that the homeowner is seeking to refi the property as “owner occupied” (which carries a different, lower interest rate) under one of the “bailout of the month” packages being proferred in Congress. The presence of a renter would of course immediately invalidate such an attempt on appraisal and would potentially reveal the original loan application as having been fraudulent.


2 posted on 02/13/2008 7:38:16 PM PST by Attention Surplus Disorder (We've checked, and all your zeroes are OK. We're still working on your ones.)
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To: fight_truth_decay
Ah, it seems the lib writer would be in favor of more housing projects affordable housing.
3 posted on 02/13/2008 7:38:36 PM PST by oblomov (Molok Obama is so inspirational. He inspires me to offshore assets & buy as many guns as I can.)
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To: fight_truth_decay

I thought if you had a valid lease on a property, that lease was binding to all subsequent owners. That is certainly the way commercial leases are treated.


4 posted on 02/13/2008 7:40:52 PM PST by proxy_user
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To: Attention Surplus Disorder

Good point..


5 posted on 02/13/2008 7:42:32 PM PST by fight_truth_decay
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To: proxy_user

The full story page 2 says:

State officials said that under California law, existing rental agreements are essentially wiped out when a property is foreclosed upon. All that’s required is that a tenant be given at least 30 days’ notice that he or she is being evicted....those officials also said that state law can be trumped by local rent-control statutes, which often provide tenants with more far-reaching protections.


6 posted on 02/13/2008 7:46:33 PM PST by fight_truth_decay
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To: proxy_user

“I thought if you had a valid lease on a property, that lease was binding to all subsequent owners. That is certainly the way commercial leases are treated.”

Generally true, but a foreclosure can wipe out a lease and the whole concept doesn’t apply at all to a month-to-month tenancy. A tenant can stage some kind of legal fight to preserve a lease on a fork’ed property and I am not sure how such a fight would be adjudicated. It’s also entirely up in the air as to how a tenant in the cited situation would or could recover any security deposit.


7 posted on 02/13/2008 7:47:57 PM PST by Attention Surplus Disorder (We've checked, and all your zeroes are OK. We're still working on your ones.)
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To: fight_truth_decay

Not to mention what happened to rent rates while the property was taking its artificial climb in value.


8 posted on 02/13/2008 7:51:07 PM PST by NonValueAdded (Who Would Montgomery Brewster Choose?)
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To: proxy_user

The mortgage is usually placed on the property before it is encumbered with the lease.

If you sell the property to statisfy the mortgage, the lease is still in effect.

On the other hand if the lender forecloses on the mortgage, they take precence over the lease since it was in place prior to the lease.

At that point the lender can evict if they want to as the lease is no longer valid.

Most times the lender wants the property vacant since it is MUCH easier to sell a vacatnt property than one with renters in it. (No matter how good the tenants are!)


9 posted on 02/13/2008 7:52:05 PM PST by cousin01 (Arizona - Good job on Prop 200. Now be prepared to defend it)
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To: proxy_user

The mortgage is usually placed on the property before it is encumbered with the lease.

If you sell the property to statisfy the mortgage, the lease is still in effect.

On the other hand if the lender forecloses on the mortgage, they take precence over the lease since it was in place prior to the lease.

At that point the lender can evict if they want to as the lease is no longer valid.

Most times the lender wants the property vacant since it is MUCH easier to sell a vacatnt property than one with renters in it. (No matter how good the tenants are!)


10 posted on 02/13/2008 7:52:18 PM PST by cousin01 (Arizona - Good job on Prop 200. Now be prepared to defend it)
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To: fight_truth_decay

What none of you have reacted to is the fact that this bleeding hearted L.A. Times (typical) story only gives the Latino person’s FIRST name—”Saldago”. Well, what’s his LAST name? Or is that his last name? If so, then what’s his FIRST name?

The point being, the Times is, again, taking the side of illegal aliens. Whatever the renter/owner-seller relationship is, if the tenant is in the country ILLEGALLY, it is propbably wise to assume that he’s also WORKING illegally and is using stolen or fraudulent U.S. documents to do so, making him a felon. It is ALSO likely that he has already been deported at least once before and has broken BACK into the U.S., making him an automatic felon. Chances are, as he’s one of 40 million illegals in the U.S.—not 12 million as is stil bandied about on the internet—and about 15 to 20 million of those live in California, Southern California.

These are inconvenient factoids that the left-wing, pro-illegal alien L.A. Times would rather you didn’t know. The point IS, this man HAS no rights except the right to be deported.

Aren’t any of you the least bit suspicious?


11 posted on 02/13/2008 7:53:33 PM PST by levotb
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To: proxy_user
I thought if you had a valid lease on a property, that lease was binding to all subsequent owners

Depends on your state laws. In CA, a "month to month" rental without a specified term does not carry over to a new owner. It is an agreement between the original parties only.

12 posted on 02/13/2008 8:28:10 PM PST by GVnana ("They're still analyzing the first guy. What do I have to worry about?" - GWB)
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To: levotb
Aren’t any of you the least bit suspicious?

Did you read the beginning of my comment when I alluded to "in the shadows"? But, is a given that many rents are inhabited with illegals. If a Spanish name, I cannot just assume, as I have friends who have Hispanic names and are citizens and have held high jobs in Law enforcement, on the terrorist task force etc.

The guy with his two children found another rent, so besides the inconvenience, with temporary housing with his Mother in Beverly Hills...and driving 150 miles to work--he's surviving.

I felt the "in the shadows" comment was the writer trying to protray the renter was an illegal; but the LATimes would not go as far as call the guy such..my assumption in their word play.

But I had other fish to fry for the better.

13 posted on 02/13/2008 8:32:09 PM PST by fight_truth_decay
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To: fight_truth_decay

if lenders had any sense they’d work out deals with the renters who are paying the mortgages...


14 posted on 02/13/2008 8:33:29 PM PST by the invisib1e hand (anyone can be a soldier in peacetime.)
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To: proxy_user

I listened to Handel on the Law....he said in a foreclosure your lease in null and void in CA. He did say they have to serve you in court to throw you out on your ass though...(Unlawful Detainer) and you can drag it out for at least a month


15 posted on 02/13/2008 8:34:22 PM PST by BurbankKarl
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To: BurbankKarl

...would think there would be a security deposit? this guy took cash settlement to vacate quickly..with foreclosures in planned 30 day limbo as well, the urgency seemed somewhat questionable...the guy said he felt pressured but accepted his fate and the CASH.


16 posted on 02/13/2008 8:47:18 PM PST by fight_truth_decay
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To: proxy_user

generally, yes. Title is typically conveyed with existing restrictions, ie. lease.

But in a foreclosure situation, there is literally nobody to make payments to. Literally. Hard to believe, but it’s true. Banks have so little idea of how to manage real estate that it is almost implausible that they lend money on them.

The guy could go find another house to rent even better and even cheaper as more homes become available which need to be rented since there are not enough potential owners. This is a rentor bull market essentially.


17 posted on 02/13/2008 9:02:28 PM PST by bpjam (My party has fallen and it can't get up)
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To: levotb
What none of you have reacted to is the fact that this bleeding hearted L.A. Times (typical) story only gives the Latino person’s FIRST name—”Saldago”. Well, what’s his LAST name? Or is that his last name? If so, then what’s his FIRST name?

It's always better to read the full article of an excerpt before posting. You may be right about him being an illegal, but the LAT did print his name.

The Bush administration's announcement Tuesday that it would put the foreclosure process on hold for 30 days to rescue struggling homeowners came several weeks too late for Mike Salgado.

18 posted on 02/13/2008 9:24:00 PM PST by GATOR NAVY (Your parents will all receive phone calls instructing them to love you less now.)
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To: levotb
What none of you have reacted to is the fact that this bleeding hearted L.A. Times (typical) story only gives the Latino person’s FIRST name—”Saldago”. Well, what’s his LAST name? Or is that his last name? If so, then what’s his FIRST name?

It's always better to read the full article of an excerpt before posting. You may be right about him being an illegal, but the LAT did print his name.

The Bush administration's announcement Tuesday that it would put the foreclosure process on hold for 30 days to rescue struggling homeowners came several weeks too late for Mike Salgado.

19 posted on 02/13/2008 9:25:07 PM PST by GATOR NAVY (Your parents will all receive phone calls instructing them to love you less now.)
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To: proxy_user

It is.


20 posted on 02/14/2008 1:56:03 AM PST by gogeo (Democrats want to support the troops by accusing them of war crimes.)
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