A tale of two families: SLO County renters left adrift by foreclosures

When Gerald Chiaro moved into his new digs in Grover Beach in January 2010, he figured he’d stay awhile. He and his wife both were working — he as a caterer, she in a bank. They were able to meet the $1,600-a-month rent.

With two school-age children, Chiaro figured, they might stay there indefinitely, perhaps for years.

But in July he was formally given the heave-ho when he found a default notice on his door. By Nov. 1, he was out.

What did Chiaro do to bring this on?

Nothing. He was a renter, and he had the bad fortune to rent from a man whose loan defaulted.

The Chiaros are not alone. A few miles away, in Arroyo Grande, Ginette McCleery and her family — a household of five that, she is quick to point out, includes two cats and two dogs — also found a notice posted on her door that the house they had been renting for a year would be auctioned.

In all the hoopla and reporting that has attended the foreclosure crisis, little attention has been paid to folks such as the McCleerys and the Chiaros.

They are people who become collateral damage in the skirmish between banks and defaulting homeowners.

Their numbers are large enough to constitute a crisis, according to Tenants Together, a San Francisco Bay Area-based group that represents renters statewide.

According to Tenants United, in 2010:

• More than 200,000 residential units were foreclosed in California. Of those, more than 75,000 — or 38 percent — were rentals.

• In San Luis Obispo County, about 1,000 residential units were foreclosed, of which one-third were rentals, affecting 900 renters.

While sympathy is often lacking for homeowners who face foreclosure — after all, they made decisions that put them in their tough spot, many people feel — renters are a different story.

They did nothing to cause their grim situation and “remain innocent and forgotten victims of the foreclosure crisis,” Tenants United says.

What is it like to come home and find the heart-stopping notice on the door?

“It’s horrible,” Chiaro said. “It turned our lives upside down.”

In addition to the shock of learning you have to move, there is the stress of finding a new place to live. There is the hassle of moving. And there is worry about the kids.

Other anxieties arise. For example, “You start stressing out about, ‘Am I going to get my deposit back?’ ” Chiaro said.

To rub a little extra gravel on the festering sore, signs go up on the lawn to entice prospective buyers. There were “always people snooping around,” Chiaro said, even though when the sign said “by appointment only.”

On top of that, there is pressure to get out quickly, including a “cash for keys” program under which the new landlord — the bank — would give the renter money to leave.

With uncertain prospects for finding a new place, renters feel pressure to take the cash and hope it will buy them a little more time. “Most take (the money),” says Gabe Treves of Tenants United.

All of this activity raises a question: Why would the banks not simply become the new landlord, leave the tenant in place and continue to collect the rent? Why force him out?

Efforts to secure an answer from local banks met with no success. But McCleery theorized that banks simply don’t want the hassle of becoming landlords.

Tenants United has been tracking the effects of foreclosures on renters for years and says the situation has improved.

Fannie Mae, Freddie Mac and JPMorgan Chase now allow tenants to stay in place when they take charge, Treves said. Other banks are slowly coming around, he added.

But the word has not spread far enough or fast enough, Treves said, and many renters still have little or no knowledge of their rights.

McCleery and Chiaro are no longer in that uninformed category.

Knowledge of the rental laws may not keep a foreclosed roof over their heads, but understanding their rights helps, they say.

Meanwhile, they are coping. The Chiaros are renting in Pismo Beach. The McCleerys are packing — they have until Sunday to get out.

“We’re not sure what to do,” McCleery said. “You have to laugh about it. You have to keep going. I’ve always been a survivor.”

Neither bears any ill will toward their former landlord.

“They didn’t have a choice,” McCleery said.

Both families have steady incomes, and they worry about those who don’t.

“Imagine the people who have lost their jobs,” McCleery said. “Every time I turn around, someone is losing their home.

“We’re all a paycheck away,” she adds. “It’s insane out there.”