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Now that banks and large investors have taken possession of thousands of foreclosed rental properties, turns out the new owners are not always model landlords. From construction to upkeep, some banks are leaving tenants to live in squalor. NPR's Aarti Shahani reports.

AARTI SHAHANI, BYLINE: Pedro Jimenez signed the lease for his second floor apartment in 2006. Since then...

PEDRO JIMENEZ: Here was leaking water, part of the ceiling fall. See all the windows cracked.

SHAHANI: Cracked? Try shattered. Vandals broke them, he says. East Oakland, California is rough: abandoned buildings, crime - still, it's home to the single dad with four kids. Seven-year-old David plays handyman. While his dad patches the walls with plywood, David covers holes with sticky notes. There are yellow squares in every room but one.

DAVID JIMENEZ: That bathroom's nasty.

SHAHANI: Do you ever go in here?

JIMENEZ: No, only my dad, because it's dirty and it's nasty.

SHAHANI: That's kid speak for dangerous. Broken plumbing, splintered wood, exposed electrical wires. The original landlord was renovating when he lost the place in foreclosure. That was in 2007.

Jimenez recalls some realtor coming by to collect rent for the new owner, Deutsche Bank. Soon the water stopped running altogether because no one paid the bill. The utility company wouldn't let Jimenez pay just his part. They take only full payment for all units in the building. So, he recalls, he lifted a meter from a vacant home and re-installed it in his. It was...

JIMENEZ: The illegal way. You know, I'm not going to say I was doing it legally.

SHAHANI: Jimenez doesn't know that Deutsche Bank actually isn't his landlord. It's the trustee representing a pool of investor-owners. JP Morgan Chase - the loan servicer - handles maintenance and tenants. They've never spoken. And bank employees and Jimenez disagree about why repairs haven't happened, and why rent payments stopped last year.

According to Paul Leonard, banks are taking back homes that no one else can afford to buy. He's senior vice president of the Housing Policy Council - a trade group for the biggest housing market investors.

PAUL LEONARD: Banks don't want to take your home and own it.

SHAHANI: They're stuck, he says. Plumbing and light fixtures - that's well beyond their mission.

LEONARD: You know, a bank is not in the business of being a property manager. They have to hire a property manager to take care of the property.

SHAHANI: And are banks doing that?

LEONARD: Well, I think it varies. I think some are better than others. I think that what banks would like to do is - they would prefer a clean sale to someone that can handle it.

SHAHANI: The sheer volume is overwhelming, says Leonard. The Oakland City attorney says foreclosed properties are being bought and sold so quickly, it's hard to know whom to hold responsible for what. And, banks - they don't return city calls.

Overwhelmed or not, the U.S. Treasury recently wrote banks, warning them that they must fulfill their duties as landlords. It's a nationwide concern.

In Maryland, bank regulator Ann Norton says that for tenants and local authorities.

ANNE NORTON: The challenge is just finding the new landlord, because in many cases it's difficult to find a real, live human being that's going to take responsibility for that property.

SHAHANI: That's difficult even when there is a property manager. Take Luz Escamilla in Hyattsville, Maryland.

LUZ ESCAMILLA: (Through Translator) At night, what we do is keep the light on and don't sleep, waiting for the bugs to come up.

SHAHANI: She means bed bugs. There are chocolate-colored blotches all over her walls. It's blood. Not hers - the bed bugs. Escamilla pays $1,200 a month in rent. When the management company wouldn't fumigate for bugs or fix broken stoves, she and other tenants set out to find the landlord.

Casa de Maryland, a local non-profit, helped track down CW Capital - the servicer. CW Capital granted a meeting in their high-rise office building in Washington, D.C. Sitting across a conference table, tenants faced men in suits. When one started talking finance, organizer Lindolfo Carballo recalls...

LINDOLFO CARBALLO: One of the tenants stood up and said, you know what, I don't want to hear that. I want to hear when are you going to put my cabinets back in my kitchen.

SHAHANI: CW Capital declined NPR's requests for an interview. But tenants say a company rep did end up visiting them, and even repaired those cabinets. Bed bugs and other problems, though, remain untreated. So, tenants sued in housing court.

Ann Norton, the Maryland bank regulator, says it's often more challenging to take a bank to court, than a mom and pop landlord.

NORTON: Due to disproportional bargaining rights between tenants and the parties that are the investors, tenants feel that they don't have a voice and also don't have rights.

SHAHANI: States are at a loss too. Norton says they aren't sure how to make banks comply with their housing codes. She and nine other regulators are now drafting guidelines.

Aarti Shahani, NPR News.

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