Results will dovetail with aldermen addressing proposed ordinance on issue

During a typical week last year, 276 Chicago apartments were in buildings that fell into foreclosure, creating upheaval for families who were unsure how long they’d be able to stay in their units. Some faced intimidation and threats from property agents seeking to evict them.

The Lawyers’ Committee for Better Housing, in a study scheduled to be released Tuesday, calls for more stringent protections for renters at a time when affordable housing options within the city are shrinking and rents are on the increase.

“Every affordable housing unit is valuable, and we can’t lose another unit,” said Mark Swartz, the committee’s legal director. “We should be creating more rental units, not losing the ones we have.”

The report comes as a group of Chicago aldermen is expected to propose an ordinance this week that would force owners of repossessed apartment buildings, including those owned by Fannie Mae and Freddie Mac, to continue renting apartments to law-abiding, rent-paying tenants even after the buildings have been repossessed. The proposal calls for the rental relationships to continue, even if there was no written lease, until the building was sold.

Juan Diaz’s story is symbolic of the problems that the lawyers’ committee says are prevalent in Chicago.

For five years, Diaz, 36, members of his family and his dog lived on the first floor of a three-flat in Chicago’s Albany Park neighborhood. Last fall, a community group representative knocked on his door and told him the building was in foreclosure.

In November, he received notice that the building had changed hands and was owned by Fannie Mae. Then he began receiving unsettling phone calls.

“They kept calling me, telling me I needed to vacate,” Diaz said. “They were trying to kick me out, and I told them I know my rights and I have three months.”

Then someone else called Diaz, saying they represented Fannie Mae, and offered him a month-to-month lease for less than he was paying. But the caller added that he also would have to pay the unspecified utility costs for the entire building, then vacant except for his family.

Diaz rejected the offer and in April moved a block away to another apartment. His security deposit was never returned.

“We didn’t know how to confront this situation,” Diaz said. “You have to think what’s going to happen because people do not want to work with us and the owners. We are the renters, and the renters keep these homes producing money for the banks.”

Fannie Mae put the empty building up for sale in June, for $365,950, and it is under contract.

“What (Diaz) experienced is typical of many tenants,” said Komal Vaidya, a staff attorney at the lawyers’ committee who worked with Diaz. “A lot experience utility shut-off, they experience intimidation. What good is 90 days if you’re being harassed throughout it, and what good is a lease if there is not a responsible party to maintain it?”

The proposed Chicago ordinance, called “Keep Chicago Renting,” resembles a 2010 law in Massachusetts. The ordinance would extend the rental period for law-abiding, rent-paying tenants until the building is sold, regardless of whether there was a written lease in place, and require additional notifications to be sent to occupants. It also would not allow rents to be raised unless the building owner petitions the court for an increase and tenants had a chance to defend their current rents to a judge.

There are federal, state and Chicago laws designed to protect tenants whose buildings are in foreclosure, providing them with certain notices and guaranteeing their tenancy for a certain period of time after a foreclosure action. But renter groups say those protections fall short or are not being followed.

Although some financial institutions have “purported” to institute programs to keep renters and homeowners in their homes, the policies are insufficient, the committee’s report concluded. Of the 500 tenants counseled by staff attorneys during the past three years, the lawyers say they’ve never seen landlords provide a seven-day notice to renters when a foreclosure begins. The lawyers said they also have only seen a successful rental option arranged three times, all in cases involving condominiums, not apartment buildings.

“Banks don’t want to be landlords,” said Robert Silverman, staff counsel with Business and Professional People for the Public Interest, which worked on the Chicago proposal along with several community groups. “You have a loss of rental units, and families forced to go out and find rental housing in what is an even tighter rental market. You’re exacerbating the shortage of affordable housing and exacerbating the vacant-building problem.”

As of March, about 8 percent of the 114,157 foreclosed properties in Fannie Mae’s national inventory were occupied by renters.

“If there are particular problems about a property, we’d love to know it,” a Fannie Mae spokesman said. “If a tenant or a neighbor has an issue, then we want to hear about it.”