I found this on Ben’s Blog, and it addresses my question:

“Some displaced homeowners are getting a cool reception as the surge in real estate foreclosures sends them back to the rental market in search of shelter.”

“Nevel DeHart of a national tenant-screening company, warns that homeowners often are deeply in debt by the time a foreclosure occurs. With no financial reserves to fall back on, they sometimes make poor rental risks, he said. ‘There is just no margin for error.’”

“Ron Bowdoin, who oversees 2,500 rental units in Los Angeles and the Inland Empire, said foreclosure victims often fail to meet his company’s credit standards.”

“‘As they reach the brink of foreclosure, their credit reports have suffered tremendously,’ he said. ‘We have to do a co-signer or large deposits to get them into apartments.’”