Charles Oertel said he did nothing wrong when he rented the house to the Simmons family while it was headed to foreclosure.

The Providence Journal / John Freidah

Maria Simmons knew nothing about her landlord’s financial problems when she and her family moved into their rental house in a middle-class neighborhood in East Providence.

But the houses on Oak Avenue squeeze up against one another, and neighbors talk. One month after the Simmons family moved in, a woman across the street spotted a foreclosure notice for 95 Oak Ave. in The Providence Journal.

You know your house is being foreclosed on, don’t you? she said to Maria.

No.

He hasn’t told you?

Maria, a nursing assistant, and her children had spent the last four years on the move — Alaska, Texas, Rhode Island — coping with one crisis after another.

Her 18-year-old daughter, Nicole, was recovering from bone cancer treatments. Maria’s husband, Ken, had come home from fighting in Afghanistan and Iraq with a bad back, ringing ears and an Army severance that was running out.

The Simmons family had been staying with relatives at two different houses, sleeping on sofas. One day, Maria ran into landlord Charles Oertel, who lives across the street from her parents, and he offered to rent them the three-bedroom house at 95 Oak Ave., next door to his house, at $1,300 a month.

Finally, she thought, someone was trying to help.

“He seemed really decent,” Maria said, later. “How could he do that?”

OERTEL HAD once owned 10 rental properties around East Providence. A wholesale meat salesman, Oertel said that he and his business partner, William Shawn Prunty, built their real-estate portfolio with risky subprime loans.

Then, real-estate values plunged, credit dried up, and demand for rentals softened. By the time 95 Oak Ave. was advertised for auction, they had lost all of their rental properties, except for one other. And that one, too, was headed for foreclosure.

Back in September 2004, Oertel and Prunty paid $233,000 to buy 95 Oak Ave., according to The Providence Journal real-estate records.

“It had a big back driveway,” Oertel said, “and I thought I could gate it and use the driveway and the tenant could park on the street.”

At the time they bought the rental house, property values all over Rhode Island were soaring. Oertel and his partner borrowed $186,400 from California-based Aames Home Loan, according to city property records. The 30-year mortgage carried an initial interest rate of 6.53 percent, which was scheduled to adjust two years later to a maximum of 9.53 percent. Thereafter, the rate would adjust every six months, to a maximum of 12.53 percent.

“When the boom was going, we thought it was good to make an investment,” said Oertel. “I consider myself a smart person. You listen. You never think it’s going to go down.”

Nor did he consider the hassles of rental property management. Some tenants paid their rent late; others did not pay at all. Evicting a tenant for nonpayment took up to six months. That was six months with no rental income to pay the mortgage.

“The first tenants [on Oak Avenue] rented from September through April and left owing two months’ rent,” Oertel said. “Then we got two guys in there, cousins, both working good jobs. They left owing about five months’ rent. Then I had some wonderful tenants — a husband and wife and baby — and they left.”

Meanwhile, the mortgage payments on 95 Oak Ave. began to climb. By last year, the payments had increased to about $2,300 a month, $1,000 a month more than the rent. His investment was losing money.

“When you’re a personal investor,” Oertel said, “it’s almost like a pool of investments in your portfolio, and when one place starts to tumble they all start to tumble.”

So, Oertel stopped paying the mortgage on 95 Oak Ave.

“It was a business decision. I couldn’t afford it anymore. I was gonna lose it anyway,” he said. “I think the last payment I made was in February.”

Oertel’s partner, Prunty, could not be reached for comment.

In June, Oertel agreed to rent the house to Maria Simmons and her family for $1,300 a month. By then, he was already three months’ behind on the mortgage. But he said nothing to his new tenants.

ON JULY 2, Maria Simmons paid her landlord $2,600 cash for the first month’s rent plus a security deposit. Oertel, who was leaving for a visit to Cape Cod, scribbled a receipt on a piece of lined yellow paper.

“When I get back,” Maria recalled him saying, “we’ll write out some kind of lease.”

The Simmons family had been living off Ken’s Army severance — about $16,000 after taxes — which they used to pay their rent, car loan, car insurance, utilities, groceries and more.

One day after they moved into their new rental house, a lawyer who represents a loan servicer for Deutsche Bank wrote a letter to their landlord stating that the property at 95 Oak Ave. was “to be sold at a foreclosure sale” on a date to be determined.

The letter stated that the first auction notice would run in The Providence Journal on Aug. 2.

Maria Simmons did not see the legal notice on Aug. 2. If she had, she said, she would not have written Oertel a $2,480 check on the same day for August and September’s rent. (He let her deduct $120 for paint and the cost of removing an old refrigerator.)

Money was tight. Maria’s nursing certificate had expired, Ken had no job, and by August, his Army severance had nearly run out. He took a job at Wal-Mart for $9.95 an hour; each day, he took three Tylenol with codeine to dull his back pain enough so he could unload the trucks and stock shelves.

Maria had reasoned that if they paid their rent through September, it would give them a measure of security.

“I didn’t want to fall behind,” she said, later.

Oertel cashed Maria Simmons’s $2,480 check on Aug. 3, according to her bank records. Even though Oertel’s property was in the process of foreclosure, nothing in the law prevented him from collecting rent because as long as his name was still on the property deed he was its legal owner, said Rhode Island Legal Services staff attorney Aline Carton.

“There is nothing in the law,” said Carton, “that requires the landlord to give notice” of the foreclosure to tenants.

Oertel said he did nothing wrong.

Seated in his SUV outside his duplex, cell phone in hand, he described himself as someone who was simply trying to preserve his investments in a market fraught with risk.

Real estate, he said, is like the stock market. “You buy 10 stocks and you buy 10 buildings,” he said. “Then people have to sell to get out because they need the money.”

Oertel, who is 57, blamed his financial losses on mortgage brokers and lenders and unreliable tenants. Not the Simmons family, though. He said they paid their rent.

Oertel used the Simmons rent money to try to keep his other properties out of foreclosure. Further, he said, the family paid no rent after September. He also returned their $1,300 security deposit.

“I used the money to try to keep the round-robin going,” he said. “You start robbing Peter to pay Paul.”

Oertel said that he is the one who lost money, not Ken and Maria Simmons.

“Nobody got hurt in this,” he said, “right?”

THE DAY BEFORE Thanksgiving, Maria and Ken Simmons waited on a wooden bench outside room 4G in District Court, Providence, for a hearing before a judge.

They had received a summons to appear in court for an eviction hearing. Carton, the Legal Services lawyer, crouched next to them, speaking in a soft voice. She explained that as tenants in a foreclosure, they had no choice but to move out; all she could do was to try to negotiate with the lawyer representing Deutsche Bank National Trust Co. for more time.

“They want to be able to have a guarantee you’ll move out on whatever date they agree to,” said Carton.

“If I would have known,” Maria said, her voice cracking, “I never would have moved in.”

She lifted her glasses and wiped her eyes.

“I’m saying January 2nd,” Carton said. “They’re saying the middle of December.”

Maria tried to focus on what the lawyer was saying, but her mind kept wandering back to the day she first talked to Charles Oertel.

He had taken their rent money and used it — for what?

“What makes me so mad,” she told the lawyer, “is he knew, he knew.…”

The words caught in her throat.

Ken Simmons kept an angry silence. The day Maria had told him about the foreclosure, Ken knocked on Oertel’s door. He asked the landlord flat out: If you’re not going to own the house anymore, why should we pay you the rent?

“Everybody’s got to pay rent or mortgage,” Oertel recalled saying. “You might as well stay until the bank evicts you.”

Ken, who is 26 and solidly built, said he had an idea what he wanted to do to the landlord, but he kept calm and left.

If they had known that the house was already in foreclosure, he said, “we would have never moved in.”

The lawyer for the bank agreed to let the Simmons family stay through the holidays. They had until Jan. 2 to move out or face eviction, and pay “use and occupancy” fees of $1,800 dating to Oct. 2.

MARIA SIMMONS spent the next few weeks combing newspaper ads and searching online for rental houses. She found one, but then the owner said the tenants were not moving out. Another would not allow their dog.

To pay the bills, she had been working the night shift at Target for $8 an hour.

Finally, one morning, Maria saw an ad on Craig’s List for a four-bedroom house in East Providence for $1,200 a month. She called and called until the property manager answered, and they made arrangements to look at the house.

It has two bathrooms and a big backyard. Her daughter Nicole could walk to the high school. The application asked for references and Maria took a chance and wrote down Charles Oertel.

“At least,” Maria said, “he was decent enough to give us a good reference.”

The property manager called back to say it was theirs. “I thought I won Powerball,” said Maria, grinning.

The Rhode Island chapter of Operation Stand Down, a national coalition that helps homeless veterans, gave the Simmonses $400 to help pay their security deposit. Ken added the $500 he got from the Veterans Administration. Maria cashed in a $1,100 annuity she had from when she was working in Alaska. Family chipped in and Maria wrote a check for $2,400 for security deposit and rent for half of December and the month of January. They signed a one-year lease.

Days before Christmas, Ken, Maria and her two sons and daughter were packing to move into the new house. Ken shuffled, groggy and yawning, into the kitchen and reached for the jar of Folgers instant coffee. He has landed a new job working nights as a security manager for $13.50 an hour. He was scheduled to work a double-shift that day.

Maria walked into the kitchen carrying her older daughter’s 15-month-old.

“This little one, it’ll be her first real Christmas,” Maria said.

They will definitely get a Christmas tree. No presents, though. “I can’t afford it.” She is still trying to pay off a $640 electric bill from the Oak Avenue house.

Maria sat at the kitchen table and opened the mail. Her request for Social Security disability benefits for Nicole had been denied. Maria read the letter aloud, a hint of dark humor creeping in when she got to the part that referred to Nicole still having use of her arms and legs.

“We can appeal,” she said, matter-of-factly.

At the moment, nothing felt insurmountable. They found a home.

larditi@projo.com