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Hartford Tenant Fights To Stay In Home After Foreclosure

The Housing Crisis

KENNETH R. GOSSELIN

October 24, 2008

Four days after Evelyn Colon paid the September rent for her Hartford apartment, a state marshal knocked on the door.

He handed her a notice that she had to be out in a month.

Fannie Mae, the huge mortgage financier, had foreclosed on her building and was evicting Colon and two other tenants.

Colon is now fighting her eviction in what her attorneys believe is the first court challenge in the country to use a provision deep within the government's $700 billion bailout legislation to seek protection for renters facing eviction after foreclosure. She will be able to stay in her apartment while the case is litigated.

If successful, tens of thousands of tenants like Colon who have dutifully paid their rent may get a chance to stay in their apartments even if their landlords' property has been foreclosed on by federal agencies that help fund mortgages.

The case, filed in Housing Court in Hartford, could bring more attention to the plight of renters in the foreclosure mess, many of whom are being kicked out of their homes because their landlords have defaulted on their mortgages. So far, most of the attention has been on trying to keep homeowners in their homes.

Colon's attorneys at Greater Hartford Legal Aid Inc., an agency that helps low-income clients, are arguing that Fannie Mae became a federal agency when it came under the control of the Federal Housing Finance Agency Sept. 7 and is therefore bound by the financial services bailout legislation.

While the number of foreclosures in Connecticut is dwarfed by problems in states such as California, Florida, Michigan and Nevada, the figure is rising. And Greater Hartford Legal Aid is seeing an increase in the number of tenant evictions, lawyers there say.

Colon, a single mother of three who works a 40-hour-a-week job as a gas station attendant in Hartford, contacted Legal Aid after she got a formal eviction letter a week or so after the marshal's visit.

She said she isn't about to give up her apartment without a fight and is hoping that the bailout legislation — wrought in Washington, D.C., hundreds of miles from her three-bedroom, 1½-bath apartment — can help her stay.

Fighting the eviction based on the bailout legislation is unknown legal territory. The tenant issue hasn't been addressed by the U.S. Treasury or the courts because it is so new, according to Legal Aid lawyers. And in taking up the fight, Colon is taking on a titan of the mortgage business that owns or guarantees trillions in home loans.

Colon moved into the 1890s Marshall Street building in 2005. It's close to her 8-year-old daughter's school and after-school care. Colon has fixed up the apartment, mostly with second-hand furniture she's saved up to buy — "not too fancy, but good," she says. She knows her neighbors and loves the parking space in back so her car is off the street.

"I don't want to move," said Colon, who has two of her three children at home, including Eva, who turned 1 on Wednesday and just started walking. "You can't find anything decent out there. This apartment doesn't have roaches or anything."

The provision of the bailout legislation that Legal Aid is focusing on provides for reworking mortgages of borrowers "and, where permissible, to permit bona fide tenants who are current on their rent to remain in their homes under the terms of the lease."

Stephanie D'Ambrose, the Legal Aid attorney representing Colon, said she isn't bothered by the wording "where permissible."

"We think it's Fannie Mae's burden to prove that it's not permissible," D'Ambrose said.

D'Ambrose said she considers Colon a "bona fide" tenant because she has consistently kept up with her rent payments.

Amy Bonitatibus, a spokeswoman for Fannie Mae, issued a brief statement late Thursday in response to inquiries from The Courant.

"We are reaching out to the tenants and their representation to ascertain their willingness to allow us to market the property while they live there," the statement said. "Given the circumstances, we are committed to working with the parties involved to seek a resolution that would permit the tenants to stay in the property."

Bonitatibus declined to elaborate on whether Fannie Mae had consulted the bailout legislation in making its decision or whether the Legal Aid lawsuit had influenced its position.

Hunt Leibert Jacobson, the Hartford law firm representing Fannie Mae locally and one of two in the state most active in legal work related to foreclosures, did not return calls or respond to an e-mail seeking comment Thursday.

Colon said the apartment fits her tight budget well. Her job pays $9 a hour, and she takes home about $275 a week. She pays $406 a month in rent, receiving a Section 8 housing subsidy to make up the balance of the $1,053 monthly rent. The rent includes heat, hot water and electricity, she said.

Colon said she doesn't qualify for other subsidies because she works and must balance her rent with gas, food and child-care costs. She is proud that she squeezes a 40-hour work week into four days so she can spend more time with her children.

Colon said she did try to look for another apartment.

"You can't find anything decent for what I pay here," Colon said. "I did find one place near where I work for $1,300 a month but it's too high for Section 8." Colon said it also didn't include the cost of heat, hot water and electricity.

David Pels, an attorney at Greater Hartford Legal Aid, said it is ironic that on one hand, the federal government and Fannie Mae want to force Colon out of her apartment and on the other hand, are helping subsidize her housing with Section 8 funding.

Pels said lenders that foreclose often try to evict tenants because they don't want the costs or responsibilities that come with being landlords.

"And properties are easier to sell if they are empty," Pels said.