Community Corner

A Foreclosure Whodunit

Struggling homeowners move out and a new family moves in with a fake lease. How did they get there, and why are they still in the house?

Here’s the scenario: A family defaults on its mortgage payments and is informed that the bank will foreclose on its San Leandro home. The family petitions the lender for a short sale. The lender doesn’t respond. The family, without recourse, moves out and moves on.

Months later, a new family is in the house. But the house is still formally in the previous owner’s name, and the new family has no valid lease. Yet the newcomers continue to live in the home, apparently rent-free, and not entirely peacefully, to the dismay of neighbors.

How did they get into the house? Are they, in fact, paying rent, and if so, to whom? If the family is living there illegally, why can’t the police do anything about it?

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Similar scenarios, and accompanying questions, are occurring all over the country — fallout from the flood of foreclosures, and gaps in the system that allow some to take advantage of the chaos.

This particular foreclosure whodunit is playing out on a mostly quiet, upper middle class residential street near the northern edge of San Leandro.

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Dreams Fulfilled, Dreams Lost

In October, 2006, just months before the subprime mortgage meltdown sparked a wave of foreclosures, Daniel Guzman and Berenice Martinez bought their dream home. The 3-bedroom, 2-bathroom home is described on a local real estate website as a “Stately Traditional Tudor located on a quiet tree-lined street in the highly sought after Broadmoor District.”

“It was a big dream for us to live in a nice neighborhood,” Guzman said. But, as with many Americans in recent years, the payments on the couple’s two mortgages on the house on Beverly Street became overwhelming. Guzman started to think about getting rid of the house after he had to sell several cars to come up with the monthly mortgage payments.

“I thought if I keep going this way, we’re going to be left with nothing. That’s when we decided to get out,” Guzman said.

He and his then-wife, Martinez (they’re now divorced), enlisted the help of Gayle Threets, a Lafayette-based real estate agent (the same one who still has the house listed on his website). Threets sought to persuade the mortgage lender, the now-defunct New Century Mortgage Corp., to let Guzman and Martinez unload the house through a short sale.

A short sale, in which the proceeds are less than the amount due on the mortgage, requires the lender’s approval. Around the same time Guzman and Martinez sought a short sale, New Century was filing for Chapter 11 bankruptcy.

Even though a buyer was interested in the home for more than a year, according to Guzman and Threets, the lender never approved a short sale. So Guzman and Martinez packed up and moved out of their dream house in February, 2008.

New Tenants

Later that year, a new family moved in. The neighbors welcomed a middle-age woman named Rhonda Brewer and her four family members.

One neighbor lent an older man living in the house some tools so he could fix up the yard. Another couple living on the street assumed the family had bought the house and, curious about how much housing prices had fallen, asked Brewer what she paid for the house. She told them $100,000.

The inquiring neighbors, who knew the previous owners had paid more than $600,000 for the house, were shocked at just how bad the housing market had gotten. (In fact, Guzman and Martinez paid $670,000 for the house, according to county records.)

At first, life continued as usual on the street, except for a lingering concern among homeowners — shared by their peers across the country — about the falling values of their own homes. But soon, problems arose with the new tenants.

Neighbors report a constantly changing stream of people going in and out of the house; cars making quick stops, and then peeling away from the curb and zooming off; loud music, and young men smoking marijuana in front of the house.  

According to police records, officers were called to the house 38 times between April 2009 and January 2011. Many of the police visits were security checks or patrol checks prompted by calls about suspicious circumstances, persons or vehicles at the house. Most didn’t go further than that.

In September  2009, police were called to the house in response to reports about a man with a gun in the backyard. It turned out it was a BB gun; the man was Brewer’s teenage son.

Other calls were more serious. The Oakland Police Department once went to the house to look for a potentially violent suspect, according to Lt. Jeff Tudor, spokesman for the San Leandro Police Department.

The police considered the house dangerous enough to warrant sending three units to the property each time they were called to respond to an incident there. But they never arrested anyone there.

In another incident, a neighbor called the police when she allegedly saw a man climbing an electric pole outside the house at night. Responding officers didn’t find evidence of the claim, but the neighbor said PG&E workers arrived the next day and told onlookers that power to the house had been cut off, and someone had tried to reconnect it.

San Leandro Police Officer Kerri Kovach, who has been investigating the situation for years, confirmed that the Brewers had racked up a high electricity bill and PG&E had cut off power.

Meanwhile, neighbors had become increasingly concerned. Olga Gutierrez, who lives near the house and has three young children, said she worried about her kids walking alone to and from school. 

“We just didn’t feel safe,” she said. At the same time, she and others were becoming frustrated by what they saw as failure to act on the part of police.

“We felt like, why are we even calling them?” Gutierrez said.

By then, she said, the neighbors had begun to suspect the Brewer family was occupying the house illegally.

Absentee Owners and a Fake P.O. Box

Although the foreclosure process began on the home in 2008, the bank lagged in taking possession of the home. Not until Feb. 15, 2011 did Bank of America, which had by then been determined to be the owner, put the house up for auction. After it failed to sell, the bank took possession.

During the over two years leading up to that date, police had put together evidence suggesting the Brewer family was squatting in the home. Rhonda Brewer told officers she was renting the house from the former owners and supplied officers with a lease. The lease named Daniel Guzman and Bernice Harper (Guzman’s former wife was Berenice Martinez) as the owners.

Police tracked the P.O. box to which the rent check was purportedly sent, as stated on the lease, and found it was owned by a woman who police said knew nothing about the situation and had never received any rent check.

Police also obtained an affidavit signed by Guzman and Martinez asserting they hadn’t rented or sold the house to anyone and had no knowledge of the family living there.

In early March, Brewer told San Leandro Patch that she sent a check for $1,200 every month to the owner, “Bernice.” She said she hadn’t known the house was in foreclosure until the previous week.

“Bernice never told me she lost her house,” Brewer said. “I would have never known if the people from the bank hadn’t come.”

Brewer said she never had any personal contact with Guzman or Martinez.

Gone and Back Again

After the Brewer family’s power was cut, sometime last year, they lived without electricity for about a month, according to neighbors. Then, as quickly as they came, they moved out.

Neighbors breathed a sigh of relief and assumed the saga was over.  

“We thought our efforts had paid off,” Gutierrez said. “We were finally rid of them.”

But early this year, the family was back in the house, and the calls to police started up again.

While police say they’re convinced the Brewers have been squatting in the home from the start, they don’t know how the family found out the residence was empty or got inside. Similar incidents have been reported around the country, often involving unscrupulous real estate agents or savvy scammers who search out unoccupied properties, break in and offer them for rent.

Threets, the real estate agent who tried to help Guzman and Martinez get permission for a short sale in 2008, said he found out about the squatters when he visited the property and found the locks had been changed. He said he couldn’t remember the date.

Threets said he had no idea how the Brewers found the house. He said he did what he could to remedy the problem. “I called the local police, I went down to City Hall, we did everything we could,” Threets said. “There wasn’t a whole lot we could do,” he added.

Kovach, the police officer who’s been following the situation, says she doesn’t remember ever getting a call from Threets.

For her part, Brewer, the tenant, said she used to live down the street from the house and found out it was for rent because there was a “For Rent” sign in front of the house at the time.

The neighbor, Gutierrez, said there was never a “For Rent” sign out, but there was a “For Sale” sign put up after Guzman and Martinez moved out. She said it took the Brewers a few months to take the sign down after they moved in.

Guzman, the former owner, said the house was never advertised for rent.

He said anybody with access to information about the house, which was advertised on the Internet, could have been responsible for getting the Brewers into the home.

“Who knows who did it? I know it wasn’t me, I know it wasn’t my wife,” Guzman said.

Threets said he has kept the house advertised as being for sale on his website for "bragging rights." 

Nothing to be Done?

Officer Kovach says she sympathizes with the neighbors, but the police can’t do much more than they have because technically the victim in the case is the bank. The police have no authority to order the tenants out because the matter is civil — between the owners and the tenants – not criminal. The bank would have to ask the police to prosecute the inhabitants for trespassing.

“I feel horrible there’s not more I can do,” Kovach said.

The city’s jurisdiction ends with what is visible from the street or sidewalk. Through its community preservation and weed ordinances, the city can fine tenants for things like visible weeds over 18 inches high or junk on the front lawn.

Bill Baptista, head of city code compliance at the police department, said the city tackles blight associated with foreclosed homes through the abatement process. The city sends a notice to the most recent owner notifying them of violations. If the violations aren’t corrected, the city assesses unpaid penalties, hires a contractor to bring the house into code compliance and puts an annual lien on the property tax.

Baptista said the city has had relatively few problems with foreclosed homes, compared to other cities in California and around the country. He said four to six homes go through the abatement process every year. 

“Fortunately San Leandro is more of a mature city,” Baptista said, explaining that most of San Leandro’s residential real estate was developed and occupied when the housing bubble burst.

Baptista said he was unaware of other homes currently inhabited by squatters in the city, but San Leandro Patch observed a man walk into the San Leandro Police Department on a recent morning and report squatters living in a neighboring house on Pierce Street. 

Baptista said foreclosures are scattered throughout the city rather than concentrated in certain areas. Nevertheless, he said, “If you live right next to the home, it’s probably a big problem.”

Baptista said part of the problem with foreclosed homes is that banks often take months or years to foreclose on a home, leaving them unoccupied and vulnerable to squatting or just simple decay. And neighbors have no choice but to hope foreclosed homes get sold sooner rather than later.

“I have not found any rhyme or reason about when banks want to unload properties,” Baptista said.

Officer Kovach had hoped the city would adopt an ordinance like one Richmond has used successfully to penalize banks for failing to keep up properties they’ve foreclosed on. 

Under the ordinance, passed in late 2008, owners of a blighted property are given 30 days to bring the property into compliance, or less if a condition threatens public health or safety. If the property isn’t brought into compliance, the city begins to levy a fine of $1,000 per day, up to a total of $30,000.

In the first year of the ordinance, the city collected $600,000 according to an article in the online news site Richmond Confidential.

On Their Way Out

For the Brewers, their stay in the house on Beverly Street seems likely to end soon. Bank of America took possession of the house in February and offered the Brewers $5,800 to vacate the property by March 24 in a so-called “cash for keys” deal.

The bank upheld its offer to the Brewers even after being informed they were squatters by Felicia Duncan, the real estate agent assigned by the bank to the property.

Nevertheless, Duncan said she was concerned the Brewers wouldn’t fulfill their commitment to fully vacate and clean up the property by this Thursday. Cars were still in the driveway as of Monday morning.

If they don’t vacate, the county sheriff's department will evict the Brewers on April 24, Duncan said.  


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