Renters, too, face mortgage fallout

Unwary tenants find themselves caught in a widening web of fraud and foreclosure.

Published May 30, 2007

To a family from the concrete canyons of the Bronx, it seemed ideal: a spacious Tampa home with a big back yard for the kids. And it was available for rent with immediate occupancy.

Two months ago, Nikki DuFore and her husband paid the owner $3,000 and settled into the house with their three boys. But their stay may be short-lived. On May 19, they were served with notice that the bank seeks to foreclose because the owner is months behind in his mortgage payments.

"It was a shock," DuFore said. "We had just moved in, and now we're already having to look for another place. It's a big expense right now."

It used to be that tenants got all the scrutiny, with landlords demanding references, proof of employment and other assurances the rent would be paid.

But in Florida's topsy-turvy, fraud-plagued real estate market, it's the property owner who may warrant a closer look. Owners who can't pay their mortgages are leaving tenants like the DuFores in the lurch.

"We've been getting a lot of calls of late, and the amount of these calls is increasing because more people are in foreclosure," said Tom DiFiore, head of the housing and consumer unit of Bay Area Legal Services. "You should always be wary."

During the peak of the real estate boom, many buyers were lured into the market by 100 percent financing and risky types of adjustable rate loans. As the market cooled and property values fell, they found themselves stuck with steep payments on property no longer worth the mortgaged amount.

One result: an increase in the number of financially strapped owners trying to rent homes and condos they can't sell. Another result: tenants who find themselves defendants in foreclosure suits.

The ghost owner

Jason Wade can't believe it might be happening again.

Forced to leave one house because the lender foreclosed, he wound up in another rental whose owner is also behind in mortgage payments.

"We don't want to be here and have the same guy from the Sheriff's Office showing up to serve us with foreclosure papers," said Wade, owner of an aquatic weed management company.

Wade and his girlfriend first rented from Victor Clavizzao, a loan officer and felon whose suspicious real estate transactions have been chronicled in the St. Petersburg Times. As Clavizzao's house went into foreclosure, the couple moved in April to another home less than a mile away in northeast St. Petersburg.

That house had been vacant since October, when it sold for $695,000 -- $315,000 more than it had sold for six months earlier despite the sagging market. Records show the house is mortgaged for the full $695,000 in the name of Heather Hall.

Wade and his girlfriend figured everything was on the up-and-up because they found the house through a Tampa property management company, DLG Management Services. But they thought it curious that they paid the $2,000 monthly rent to Billy Womack, not to Hall, the owner. It was also Womack, not Hall, who had paid the water bills while the house was empty.

There were other signs of potential problems. Mail, including late notices from lenders, piled up because Heather Hall never collected it or left a forwarding address. The 2006 property taxes, totaling nearly $8,000, went unpaid.

When Wade and his girlfriend said they wanted to meet Hall, Womack told them she was leaving the country for a few months. Wondering if Hall really existed, they stopped payment on the rent check.

Caught in family feud

Womack, 33, worked in Tampa nightclubs before pleading guilty in federal court in 2005 to possessing ecstasy with intent to distribute. He served seven months, emerging to start a new career in the property management business. His Web site urges investors and others to add to his list of properties "so we can All make some $$money$$!"

Among Womack's first clients were his brother and sister-in-law, whom he encouraged to buy 12 dilapidated houses in Tampa with 100 percent financing. According to a Tampa Tribune story in December, the couple didn't realize Womack had persuaded the sellers to accept lower prices, then bumped up the recorded sales prices by an average of $30,000 -- with the difference going to his company.

Womack's relatives were unable to rent out most of the houses, and 11 of the 12 are now in foreclosure. The couple could not be reached for comment. Womack, who is on probation until 2008, would not discuss what he says is "a family feud that went bad."

As for the St. Petersburg house, Womack e-mailed the tenants a statement dated May 22 in which Heather Hall authorized him to manage the property. The statement was notarized by Womack's attorney, Ivan Lenoir of Tampa, who said he met Hall only briefly and knows little about her except "that she is the owner."

Unable to afford to move again so soon, the tenants have decided to pay the rent even though they fear the house will go into foreclosure any day. Womack said he was not allowed to discuss financial matters regarding the property. He angrily cut off the conversation when the St. Petersburg Times asked to meet Heather Hall and speak with her in person.

"I don't think we need to talk anymore if you're going to dig into things that are not relevant," he said.

Avoiding eviction

Even if they suspect the owner has defaulted on the mortgage, tenants should continue paying the rent or they can be evicted.

"The reason is that a person in foreclosure can clear up the problem at any minute -- they can make back payments, they can refinance, they can file Chapter 13" bankruptcy, said DiFiore of Bay Area Legal Services. "You can get an eviction long before foreclosure is done, and that's why you have to continue paying rent."

The eviction process can take as little as 14 days. A foreclosure takes at least 90 days.

Tenants should also contact the lender to see if it's possible to stay in the house even if it is foreclosed. That's what Nikki DuFore did, only to be learn that the mortgage company is not interested in dealing with renters.

Now DuFore hopes to find some way to legally break her lease since the owners, Darwin and Celina Sealey, have not made any payments since December, according to the lender.

Sealey, a mortgage broker, could not be reached, and his wife, a real estate agent, declined to comment. The couple also have a house in Pasco County that is in foreclosure proceedings.

Do DuFore and her husband, Quwan Williams, a contractor, have any advice for others about to rent?

"Read the lease thoroughly," DuFore said. "And add on to the lease that the tenant is responsible for paying the rent but it's the owner's responsibility is to make sure the mortgage gets paid."

Susan Taylor Martin can be contacted at susan@sptimes.com.