Some displaced homeowners are getting a cool reception as the surge in real estate foreclosures sends them back to the rental market in search of shelter.

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	AFTER FORECLOSURE - Sonya Fitzgerald (at sink) is now renting as a roommate after her home was lost to foreclosure. CNS Photo by Nancee E. Lewis.

Although landlords welcome the business, they are carefully screening applicants to make sure they remain creditworthy.

Nevel DeHart of First Advantage SafeRent, a national tenant-screening company, warns that homeowners often are deeply in debt by the time a foreclosure occurs. With no financial reserves to fall back on, they sometimes make poor rental risks, he said. "There is just no margin for error."

Ron Bowdoin, who oversees 2,500 rental units for the SARES-REGIS Group in Southern California, said foreclosure victims often fail to meet his company's credit standards.

"As they reach the brink of foreclosure, their credit reports have suffered tremendously," he said. "We have to do a co-signer or large deposits to get them into apartments."

Smaller, locally owned rental firms generally are more willing to work with people who've had financial problems, he added. Large, corporate-owned complexes, which often have more amenities and higher rental rates, are less flexible.

At a locally owned complex, "you have a much better shot of being able to tell a story that is going to get some sympathy," said John Cleary, a San Diego attorney who specializes in real estate law.

With the housing boom over, there are plenty of people who could use a sympathetic ear.

Ed Byczynski, chief executive officer of the National Tenant Network renter-screening company, said deciding who should be allowed to rent requires good judgment.

"There are some landlords who will say, 'Oops, you are losing your property, you are subject to foreclosure, that violates our acceptance criteria,'" he said. "We always emphasize the need to be more judicious than that."

NO SECRETS

Sonya Fitzgerald, 41, lost her El Cajon, CA, condominium conversion unit to foreclosure in June, more than a year after she and her husband separated. A customer service worker for a cell phone company, she said she couldn't afford to keep up the payments on her own, even after taking a second job in a gift shop.

"I couldn't do it anymore," she said. "I used all my savings."

Fitzgerald recently moved into an apartment with a roommate. She said she disclosed her financial problems to the property manager, who did a background check before agreeing to allow her to become a tenant.

"It was embarrassing," Fitzgerald recalled. "I had to put it in my paperwork. She gave me an application. She said she would get back to me and she did. That was that. She gave me my parking sticker. She allowed me to stay here."

Property supervisor Christine La Marca said she approved Fitzgerald, in part, because her roommate was an established tenant. Aside from the foreclosure, "the rest of her credit looked pretty darn good."

Robert Pinnegar, executive director of the San Diego County Apartment Association, said Fitzgerald was correct to disclose her foreclosure. There is no way to hide a mortgage default from the computerized tenant screening process, he added.

"There is no anonymity," he said. "Everything about us is knowable."

A NEW POPULATION

With foreclosures mounting, the rental market is experiencing growing demand. Mortgage defaults are "creating a new population of tenants," said attorney Steven Kellman, director of the Tenants Legal Center of San Diego.

There are many local landlords who are willing to consider renting to creditworthy tenants who have gone through hard times, Pinnegar said. If the economy slows and vacancy rates rise, property managers will be more willing to "accept applicants with greater risks and overlook foreclosures."

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