illustration by Jonathan Sperry

Randy Michalke's family was doing all right. After a car accident and surgeries, Randy, his wife, and two kids were living paycheck to paycheck, pulling together enough money to make rent every month since they moved into their little rental house in Lents.

Unfortunately, their landlord didn't have the same fiscal discipline. In late September, an auction notice arrived at Michalke's door. The landlord owed $6,363 in back mortgage payments. In January, the house Michalke lived in would be sold to the highest bidder. His family would have to move out. "It hurts," says Michalke.

In the last year, the number of property owners unable to pay their mortgages has increased by 140 percent, according to foreclosure tracking site realtytrac.com. In September, Oregon owners defaulted on 1,498 mortgages, the 16th highest default rate in the nation. While a lot of attention has been paid to people tragically losing their own homes, in Portland many renters like Michalke are suddenly finding themselves on the verge of homelessness through no fault of their own.

"Before about a year ago, I think we got a call about this once," says Ari Rapkin, who has worked for the Community Alliance of Tenants (CAT) for six years and estimates that a third of recent foreclosures are for rental properties. These days, Rapkin says, CAT gets multiple desperate phone calls every week from renters who receive word of their landlord's financial failures via an auction notice delivered to their door.

"We're seeing a hugely significant increase in people calling with concerns about, out of the blue, getting kicked out of their homes," says Rapkin. "There are many times when tenants will get a notice that their house will be foreclosed on and it's not clear what their rights are... many times tenants assume they have to leave."

Legally, landlords have to give renters 30 days to move out after handing them an official termination notice. But when a bank becomes the landlord, the situation gets confusing: Banks want properties vacated so they can sell them to recoup lost income. But since foreclosures used to be relatively rare, the financial institutions often do not have the framework to deal with complicated landlord-tenant issues.

"Banks aren't in the business of being landlords," explains Rapkin. "So it's not really in the nature of their business to negotiate with tenants and explain landlord-tenant laws."

Michalke did not know where to turn for a straight answer on what his family should do after it received the auction notice. By the time he found CAT's Renters Rights Hotline and learned he might have an extra 30 days in his house, he had already given notice at work.

"We're not ready to move, physically," says Michalke, who injured his neck last year. "We don't have the resources for deposits, either."

Families and individuals living paycheck to paycheck are hit hard by orders to vacate a house. Coming up with first and last months' rent, a deposit, and money for a moving truck can be impossible and, according to Rapkin, there is currently no local social service that helps low-income people cover the costs of moving. Some people wind up in friends' houses, some families wind up in hotels.

City Commissioner Nick Fish's office does have a federal grant to help create more affordable housing in Portland, which they hope will alleviate the effects of the mortgage crisis. As part of a federal foreclosure bill passed last spring, the city has about $3.6 million to buy up foreclosed properties and then sell or rent them to people at an affordable rate. But that means whoever is in a foreclosed house in the first place is out of luck.

"It's sort of dealing with the damage after the damage is done," says Sam Chase, Fish's chief of staff. "We're evaluating what we can be doing in a much more proactive way."