Because she had bad credit, J. Louise Browner could not find a landlord willing to rent her an apartment. Then, in late 2002, she discovered a firm that promised to help her. For a fee, the company would act as a middleman, renting an apartment on her behalf and relaying her monthly payments on to the landlord. Within three days, Browner located a townhouse for herself and six children in Greenbelt.
"We had to pay a lot of money upfront -- $1,700 -- that was the fee for taking a chance on me," said Browner, a government employee. She also paid the firm a 20 percent surcharge on her monthly rent of $1,189. But for a long-term lease, Browner thought the extra money was worth it.
Her comfort evaporated, however, eight months after she moved in, when she received a court summons, saying her July 2003 rent was late. Browner said she had sent the money to the rental locator, but it had never been forwarded to the landlord. When she tried to pay the landlord directly, the rental locator balked, saying the lease was with his company, not the apartment complex. Fearful she would lose more money if she continued to pay the locator, Browner moved out in September, days after she received an eviction notice.
Rental locators are a relatively new breed of company, born of the era of fast and thorough credit and background checks. Renting with cash or a wave of last week's pay stub is rarely possible these days. People who have well-established jobs with decent salaries, but bad credit or no rental history, are being turned away by landlords. With bankruptcies at an all-time high and foreclosures near record levels, there has been a growing pool of such candidates, housing officials said.
Although some credit-troubled tenants praise their experience with rental locators, Browner is one of a growing number of renters complaining about some of these firms after getting in deeper financial trouble.
Peter Drymalski, investigator for Montgomery County's landlord and tenant affairs office, says some of these firms may be "predatory middlemen, arranging subleases to people on disadvantageous terms. They are trying to take advantage of people who can't get their own leases and charging huge premiums for doing it."
Locator company fees often include a 15 to 25 percent surcharge on the monthly rent as well as a nonrefundable upfront charge equal to a month's rent.
In recent months, the Better Business Bureau of Metro Washington and local law enforcement officials, including judges in Prince George's County, have noticed an increasing number of complaints from tenants who have used these services. The tenants have filed complaints or told the courts that their rent checks have not been forwarded to the landlords.
Thurman Rhodes, the administrative judge for Prince George's County District Court, said judges there are increasingly concerned and have started to call rental locators into court to account for their actions. "If we don't hear from these companies, we may refer this matter to the [state] attorney general's office to be investigated as a possible consumer complaint problem," Rhodes said in a telephone interview.
The local Better Business Bureau has issued unsatisfactory ratings on two such firms: Metropolitan Rental Locators and BenneriC. The watchdog group's president, Edward J. Johnson III, said complaints fall into two categories: Either large fees are paid up front and promised services are not provided; or the company fails to forward the rent check, which often leads to eviction.
Real estate industry officials, nationwide property management firms and real estate lawyers say complaints about the middlemen appear to be localized, with most of the grievances coming from tenants living in Prince George's County. A few complaints have been filed in Montgomery County and the District.
The rental locators help give credit-strapped individuals "a place to live, albeit at a premium," said Chad Duran, supervising lawyer with the Maryland Legal Aid Bureau. "Theoretically," he said, the plan "could work, but it tends to hit lower-income households much further and raises their costs greatly."
And when disputes arise, the tenants may find it difficult to assert their legal rights because their name is not on the lease, Duran said.
Enid "Yvette" Mitchell turned to BenneriC in June 2003 after bills owed by her husband, who was unemployed because of illness, had wrecked her credit. She said she paid BenneriC an initial fee of $117 and within a week she moved into the apartment she wanted in Princeton Estates in Temple Hills. Every month, Mitchell said she would pay BenneriC $890 -- $840 for rent plus a $50 fee.
All went well until late summer, Mitchell said. Then, she started getting notices from her landlord and the sheriff saying that her rent was late.
When she called BenneriC, she was told there was a processing problem, but her rent had been paid, so she could ignore the notices. But she continued to get eviction notices, until, in January, the landlord told her she had to move; the tenant, which was BenneriC, not her, was being evicted. The landlord moved her to another apartment in the same complex at the same rent, but Mitchell said, "it's nowhere near as nice."
Doug Mueller, the managing director of Sawyer Realty Holdings of Maryland LLC which owns Princeton Estates and another complex that rented to BenneriC, said "BenneriC didn't pay us" in some cases. "Rents as high as six months" were delinquent.
BenneriC's founder and chief, Eric Mitchell [no relation to Yvette Mitchell], denied the accusations, saying his firm forwarded all the rent money that was paid to him.
Mitchell said he will not do any more new business in Prince George's County, where about a fifth of his customers have lived. "We give people the last drip of a chance to get an apartment," he said. If it works, it is a threefold benefit -- for the apartment complex, which can fill some empty units; for the tenant, who could otherwise be homeless; and "our company thrives from the whole need."
Patti Shwayder, senior vice president of Aimco, the real estate investment trust that owns Springhill Lake, the 2,900-unit complex in Greenbelt where Browner lived, said that the rental locators "come in under the guise of corporate rentals" where companies rent on behalf of their employees for a short period of time. Shwayder said Springhill Lake rented about 75 units to the middleman used by Browner, DTM Inc. which also did business as Metropolitan Real Estate & Investment LLC. At the time the leases were signed, background checks into the company "came out fine," Shwayder said. Now, she added, "we're as angry and upset as anybody else is" because rent wasn't paid on many apartments.
As of late last month, Shwayder said, seven DTM tenants remained at Springhill Lakes and three were scheduled for eviction. She said she did not know if the tenants had failed to pay DTM the rent or if DTM had not passed on the money. "All we know is it hasn't been paid to us," Shwayder said. "It's been a difficult relationship."
The head of DTM, Woodrow Dews Jr., denied the company failed to pass on tenants' rent and said he was unaware of pending evictions. He added, "If we owe something, we will pay it. That's what we do. We have to."
Jennifer Alexander has high praise for apartment locators. Having defaulted on her lease because she was in the hospital, Alexander turned to Alternative Housing Solutions to help her find a one-bedroom apartment in Laurel early last year. She paid AHS $100 for a credit search and a fee equal to one month's rent -- $980.
"Money wasn't the issue because I have a good-paying job," just not a good-enough credit history to "get a good place to live," Alexander said.
AHS was started four years ago by Dennean Ferrell Love after she lost her home in a foreclosure following a divorce. "I was making good money as a legal secretary but no one wanted to give me a second chance to start over," Love said.
Love said she is helping the "working homeless" through her RentChoice program, which has helped house 300 families over four years. She now has 100 active clients.
"My fees may be high, but I have to pay for my services and overhead," which include tenants who do not pay their rent, Love said. In 2002, she added, she wrote off $250,000 in bad debt on $1.8 million in revenues. Love said if she could find another way to fund her business, such as government and corporate grants, she would.
Sharon Minson has sued Metropolitan Rental Locators, saying the company failed to forward all of her rent to her landlord, leading to two eviction notices last summer. Metropolitan Rental eventually paid the rent, and the eviction notices were cancelled, the lawsuit said, but it asked for repayment of fees and damages.
According to the lawsuit, Minson moved out of her apartment before her contract was up, with the consent of Metropolitan Rental. The company has filed a countersuit, charging Minson refused "to pay rent as agreed." The company is seeking $15,000 plus interest, late charges and attorneys fees.
Metropolitan Rental's attorney Charles G. Byrd Jr. declined to discuss the case because the suit is pending, but he said such companies take considerable risks when they rent apartments on behalf of credit-challenged individuals.
Metropolitan Rental may have missed payments in some instances, Byrd said, "but it's nowhere near the magnitude where certain individuals are trying to make it appear. Everyone's human, everyone makes mistakes and in situations where mistakes were made, Metropolitan has always tried to rectify that situation."
Browner has receipts for her rent documents from DTM and Metropolitan Real Estate, both signed by Dews. Dews said he is no longer affiliated with Metropolitan Real Estate. (Byrd and Dews said the two similarly named firms are unrelated.)
In a telephone interview, Dews said: "We're here to provide housing for folks" with credit problems. He denied allegations that DTM does not forward rental payments to landlords. "That's not us. We definitely pay our bills; that's what we do."
In December 2003, a few months after Browner moved out of Springhill Lakes, she sued Metropolitan Real Estate & Investment/DTM. The Prince George's County District Court awarded her a $2,000 default judgment on March 24. As of late April she was still waiting to be paid.
Dews said he is appealing the judgment and that she still owes him more than $4,000.
