MERCED, Calif. — The first time Carey Mitchell saw her, Tammy was standing at an intersection near the 16th Street off ramp from Highway 99. Her clothes looked dirty, her face tired. She held a cardboard sign asking for spare change.
Without thinking, Mitchell pulled her car over. In an instant, Tammy was at her window. Mitchell rolled it down. “Do you need a place to sleep tonight?” she remembers asking. On a scrap of paper, Mitchell quickly sketched a map to a house a few miles away. It was Mitchell’s house, but she didn’t want it anymore.
She'd decided to stop paying the home’s mortgage. As she walked away, she handed the keys to Tammy, who stayed for three months before she was formally evicted this May. The nights Tammy spent there were the first she’d slept inside in more than three years.
When homes fall into foreclosure, former owners who won’t leave on their own are kicked out. The homes stand empty until banks sell to new owners — at least that’s the way it usually worked before the foreclosure crisis.
But in its wake, a lot has changed. These days, it’s not uncommon to find foreclosed homes occupied by squatters, including homeless people, evicted former owners who move back illegally, and opportunists looking to live rent-free for as long as they’re able. Some are invited by people leaving the homes behind. Others aren’t.
Along with loan modification firms and a host of new industries that have sprung up around the mess, such as foreclosure cleanup services, foreclosure squatters are among the few beneficiaries of the bust. Emboldened by the sheer number of vacant homes and the months that many of them go unsold, the squatters have become a nationwide phenomenon.
And in Merced, where the foreclosure rate remains higher than anywhere else in California, they seem to be a growing population.
In Tammy’s case, the foreclosure was an older one-story on Sonora Avenue. Mitchell, a real estate agent from Redwood City, had happily scooped it up as an investment property at the height of the housing boom in 2005. But by the time she met Tammy this spring, she was angry. She owed way more on the house than it was worth, and she claims the former owner, who financed the deal himself, had concealed evidence of roof damage.
Mitchell was in town to try one last time to get him to take the house back and undo it all. He refused. So she stocked the fridge, dropped off a few towels and some dishes, then transferred the utilities to Tammy and gave her the keys.
“I said, ‘I’m done,’” Mitchell recently explained. “I wrote Tammy a note saying she had a right to be there, and then I walked out the door.”
Of course, no one tracks how many foreclosure squatters have been discovered here. But local code enforcement officers, real estate agents and police said they encounter them regularly.
Kelly Roseman, a code enforcement officer with the city of Merced, estimated that she comes across inhabited foreclosures at least twice a month. She said most cases involve squatters who would otherwise be homeless, though she’s also met families who’ve moved into foreclosed properties simply to avoid paying rent.
She recalled one case in which a family abandoned a home on 8th Street in South Merced, then gave their keys to friends who’d been renting elsewhere. “They basically said, ‘Ride it out as long as you can,’” Roseman explained. “(The friends) put the PG&E (utilities) in their name, they moved their stuff in, and when they got a notice saying the water bill hadn’t been paid, they came in and paid it.”
They stayed four months before the bank that repossessed the home offered them $2,000 to leave without a fight, Roseman said.
Such deals, called “cash for keys” agreements, were rarely used before the foreclosure crisis. Now squatters are moving into foreclosed homes and posing as legitimate tenants with the sole aim of collecting cash-for-keys payments, real estate agents said.
“A lot of times it’s just easier for the banks to hand over money instead of going through the whole eviction process,” said Susie Erb, a Merced-based real estate agent. “People know the banks are doing it, and they’ve learned to play the game.”
Another local real estate agent, Andy Krotik, said he finds squatters living in bank-owned properties so often that he now carries a crowbar for protection when he visits new foreclosure listings. “I’m sure most of the people doing this aren’t going to harm you, but you never know what you’re walking into,” Krotik said. “Before all the foreclosures, this absolutely wasn’t happening. It’s a whole new job now — a whole new world.”
Krotik said most of the squatters he’s encountered appeared to be homeless. He usually asks them to leave — but not always. “Sometimes they’ll trash the house and steal all the appliances,” he said. “Other times they’ll actually keep the places up.”
Foreclosures squatters are especially prevalent in poorer areas where neighbors are less likely to object, real estate agents and property managers observed. “It’s really bad in Winton right now,” said Dan Brunger, a manager with Kings View Work Experience Center, which dispatches crews to clean up foreclosed properties. “We had one foreclosure there where we found people squatting four different times.”
In parts of the U.S., organized movements have sprung up to move squatters into foreclosed homes. A Florida-based group called Take Back the Land began placing homeless people in vacant houses in 2007. An organization in Minnesota called the Poor People’s Economic Human Rights Campaign also has helped put families into foreclosures.
Officials at several homeless advocacy groups said there are several similar efforts taking place quietly across the country, though they knew of none operating in California.
Max Rameau, Take Back the Land’s director, said his organization has kept squatting families in foreclosed properties as long as nine months. He said the group has run into almost no opposition.
“I don’t think we could have done this a few years ago,” Rameau said. “Outside the context of the crisis, the authorities would have acted very swiftly against us, and the public would have supported that. But things are different now. So many people have been affected.”
A local homeless man squatting behind a small blue foreclosure on West 21st Street, said he’s lasted longer than six months at some properties before being asked to leave. “I guess it’s been easier for people like me since all these people started abandoning their houses,” said the 55-year-old, who would only provide his first name, Victor.
A wiry man with a neat, graying beard, Victor said he and his Chihuahua, Princess, sleep inside foreclosed homes only occasionally. They usually stay in backyards behind foreclosures or in garages. “I never mess the places up. There’s no good in that,” he said. “Sometimes I’ll clean ’em up if there’s vandalism and whatnot. I’ve boarded up the windows on places, and I’ve fixed the toilets.”
He added that he always moves on as soon as he’s asked. “I’m not looking for trouble.”
Real estate agents said that’s the case with most squatters. For those who refuse to leave, though, getting them out can be complicated. Police typically will help when a foreclosure’s inhabitants are obviously squatters, such as people living without furniture or electricity.
But when occupants claim to be legitimate tenants and have moved in belongings or signed contracts for utilities, property owners usually must go through a formal eviction process and obtain court orders before police will act. That can take as long as several months.
“It’s not always as clear-cut as you might think,” said Roberta Medina, a city code enforcement officer. “Every situation is a little different.”
In Tammy’s case, police knocked on the door at least a half-dozen times during the first week she spent in Mitchell’s house. “I’m figuring the neighbors noticed me and called,” said Tammy, who is 43 and asked to be identified only by her first name because she thinks potential employers might reject her if they find out she used to be homeless.
Tammy said Mitchell’s note of permission was enough to satisfy police, but it infuriated the home’s former owner, who has since repossessed the property. “If he had been polite, I would have agreed to a date to move out. But he wasn’t, so he had to do an eviction,” she said. “I got a notice saying I had 90 days. I thought that was pretty good.”
Tammy, who had spent the previous three years living along the banks of Bear Creek, said she used her time in Mitchell’s house to regain control of her life. She’s no longer homeless.
For now she’s making a living helping her boyfriend remodel houses, but she has bigger plans for the future.
She recently bought a pickup truck which she hopes to use to launch a business cleaning out foreclosed homes.