For UC Berkeley graduate student Steven Barcelo, what seemed like an exciting new start in his life-moving with his fiancee into a home in a nice neighborhood at a bargain rent-soon turned into a nightmare.

After Barcelo and his fiancee settled into the new house two months after pre-paying an entire year's rent to outbid other prospective tenants, they received an e-mail from their landlord that the property was going to be foreclosed.

The couple is only one of many Berkeley residents who have felt the pinch of the foreclosure crisis.

As of Sept. 17 there were about 111 out of 25,000 residential properties in the foreclosure process in Berkeley, according to city spokesperson Mary Kay Clunies-Ross. The number of foreclosures has remained at about 100 since December 2007, she said.

In August, California residents filed 101,724 foreclosures, accounting for one-third of the national total, according to RealtyTrac, a database of nationwide foreclosure rates.

Barcelo said representatives from the lending bank started pressuring him to leave the property.

"If we didn't leave, the sheriff would come by and force us to leave, was what (a bank representative) was telling us," Barcelo said.

The representative told the couple that they had a few days to move out before the sheriff could come to their home without notice and remove their belongings, Barcelo said.

Barcelo said representatives of the lending bank tried to persuade him to take a cash-for-key agreement, a sum of cash that lenders often offer tenants to leave the property. However, the couple would have forfeited a large sum of their pre-paid rent money if they had taken the deal.

Feeling harassed and confused, Barcelo turned to the Eviction Defense Center in Oakland and the Berkeley Rent Stabilization Board for legal help.

Matthew Brown, staff attorney for the board, told Barcelo that under the city Rent Stabilization and Eviction for Good Cause Ordinance, it is illegal for the bank to evict tenants on the grounds of foreclosure.

"What you commonly face is a bank foreclosing and telling tenants to leave with key money," Brown said. "Banks don't want to be landlords. They want to recover as much money as quickly as possible."

According to Brown, the cash for key practice intimidates many tenants.

"They're basically hiring local agents a lot of the times, frankly trying to steamroll people," he said. "I've seen cases where people have felt very threatened as far as having a place to come home to without having to move."

Along with threats of illegal evictions, other ripple effects of foreclosures include declining home prices and increasing demand for renting as a housing option, which is part of the reason rents are going up.

"Because credit becomes tighter, you are no longer able to afford a condo or single-family home, then renting may be your best other option to stay here," said Tim Stroshane, senior planner for the Berkeley Housing Department.

To prevent illegal evictions, the Rent Stabilization Board will be sending out letters to rental units filed for foreclosure to notify tenants and owners about tenant rights and owner responsibilities under the city rent ordinance.

"(Tenants) don't have to accept any of these (cash-for-key) deals," Brown said. "They have rights."

Tags: BERKELEY RENT STABILIZATION BOARD