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SUN CHRONICLE STAFF

For Angela Roy, the legal notice she received last week couldn't have come at a worse time.

Roy, a single mom and former Attleboro resident, received notification that a mortgage company had foreclosed on the landlord of her three-family Pawtucket apartment house and that she will have to move by Feb. 1.

Roy's mother died of cancer three days before Christmas. And Roy, herself, is recovering from a work injury that left her with a damaged shoulder and neck.

"It hasn't been a good year," said a tearful Roy, 31, who has lived in the two-bedroom, first floor apartment for three years and says she has never missed a rent payment. She is also struggling to cope with funeral expenses. Roy said the bank's agent offered her $2,000 to quit the apartment, but the offer is only good if both she and a tenant on the floor above agree to leave.

Roy says she is looking for another apartment, but is not sure how she'll manage on her limited income.

Roy isn't the only renter in the region who's become a secondary victim of the subprime mortgage foreclosure crisis.

A study by the Boston Federal Reserve Bank determined that a high percentage of mortgage foreclosures during the first 10 months of last year involved multifamily homes.

In many cases, says the Massachusetts Law Reform Institute's Judith Liben, tenants whose landlords are the subject of bank foreclosures can look forward to receiving eviction notices - even if their rent is current and they have lived up to all the other terms of their leases.

"With the increasing number of foreclosures, the problem is - if anything - accelerating," said Liben, who has testified before Congress on the subprime mortgage crisis' effects on tenants.

In most states, Liben said, mortgage foreclosures automatically terminate a tenancy and renters can be evicted with as little as three to 30 days' notice.

Massachusetts law is more tenant-friendly, requiring at least 30 days in most cases before an eviction process can begin. The law was also updated recently to state specifically that a foreclosure does not end a tenancy.

Nevertheless, Liben said, most tenants don't know their rights and don't avail themselves of legal assistance. They simply leave.

"Very, very few of the cases ever get to a lawyer," she said. Banks and other financial institutions choose to evict tenants in foreclosure situations, Liben said, claiming that buildings are easier to sell without occupants. However, there have been recent indications that mortgage-holders may be re-thinking that position.

Evicting tenants does not always improve the marketability of properties, Liben said, particularly if buildings happen to be in a neighborhood where other foreclosed apartments are also going through evictions.

Emptying out apartments may also expose them to deterioration and decay that might not occur if tenants were living in them.

Boston Federal Reserve Bank Executive Vice President Lynne E. Brown told the House Committee on Financial Services last year that while the foreclosure crisis has been hard on borrowers, there are also "broader consequences."

"The Boston Fed's analysis of the Middlesex county data shows that about a quarter of recent foreclosures involved multi-family properties," Brown said. "While this suggests an investor element to the foreclosure problem, it also highlights a potentially serious spillover effect: Tenants of foreclosed properties can frequently be evicted on short notice, even if they are current on rent and unaware of the property owner's financial position.

"Additionally, clusters of foreclosures can have adverse effects on neighborhoods, driving down property values and contributing to vandalism."

U.S. Rep. Barney Frank, D-Mass., chairman of the committee, filed federal legislation in October that would give renters without leases up to 90 days before they can be evicted as a result of a foreclosure, and up to six months if a tenant has a lease. The bill has passed the House and is now in the Senate.

However, Frank said the going has been up hill.

"I'm frankly disappointed with the amount of opposition from the banking industry and elsewhere," said Frank, who added that he plans to insist on tenant protection as part of any future legislation dealing with subprime mortgages.

In the meantime, Liben says tenants who are victims of foreclosure through no fault of their own can seek legal assistance through agencies like South Coastal Counties Legal Assistance, which provides counseling to tenants in landlord disputes.