SEDRO-WOOLLEY — A sheet hangs from the ceiling of a Skagit Motel room in Sedro-Woolley, separating 20-year-old Matthew Reyes and his girlfriend from Reyes’ grandparents, who are living in the room with them.

The light easily filters through, as does the soft voice of Reyes’ grandmother, Felicia Veirs.

A cat named Bender darts back and forth between the cramped divisions of the room. A tiny bathroom and kitchenette complete the room where the family has lived since last October.

“We were living in Clear Lake and my husband got hurt on the job,” said Veirs, 62, who doesn’t work because of a disability. “It was AIG who were supposed to be covering the injury. They were supposed to be covering the doctor.”

The troubled insurance giant American International Group, or AIG, didn’t pay, said Veirs, as she pressed together her forefingers and thumbs to form a circle the size of her husband John’s hernia.

John lost his job, Felicia spent her savings, and the couples were evicted from a three-bedroom rental house.

Anecdotal information suggests that the four are part of a growing number of families living in motel rooms across the country. It’s tough to know how exactly how many people are in similar situations, according to advocates for the homeless.

As the economy has dipped, the increase in weekly and monthly customers has been dramatic, Skagit Motel owner James Montgomery said. Several managers of other low-cost motels around the county, who declined to be named or interviewed for this story, confirmed that more people are seeking shelter in their motels as a result of the recession.

During a recent week in April, Montgomery said six rooms in his motel were rented on a monthly basis and 19 for the week to families and individuals.

Montgomery and his wife, Angie, have owned Skagit Motel, located just off Highway 20, for about two years. The motel is known for having a rough reputation. James Montgomery said he often used to find needles left under mattresses by drug users.

But the Montgomerys say they’re committed to remaking the motel’s image. Montgomery now only finds the needles occasionally.

He invites the police to check things out, kicks out anyone who causes trouble or does drugs, and keeps an eye on the registered sex offenders who live there. That’s especially important now with the growing number of children living at the motel, said Montgomery, standing near a fenced-in children’s play yard.

“When we first got here it was bad,” said Veirs, recounting police busts and shady behavior witnessed from her room.

The arrival of families has helped calm the atmosphere, Veirs and Reyes agreed. But motel life still seems to take a toll on their neighbors.

“I am amazed at how resilient kids are,” Veirs said. “I have seen a lot of families break up here.”

Montgomery tries to work closely with those clients staying for weeks or months at a time, occasionally allowing them to do chores in exchange for their stay. Sometimes he grants them an extra day to pay their bill.

Many of the newly homeless, unfamiliar and uncomfortable with shelters, gravitate toward motels for the privacy they can offer. In addition, motels don’t require first- and last-month’s rent and don’t do credit checks.

But even the cheapest motel rooms are typically pricier than comparable apartments or even rental homes.

Felicia Veirs said the roughly $1,000-per-month motel room the family occupies costs more than their previous rental house that had a craft room for her and a yard for the dog.

“We had no place to go and now all our stuff is in storage,” Veirs said.

There was no room for the family dog, so it was put to sleep. The dog’s ashes rest in an urn atop a TV in the motel room.

Social services can help the homeless pay their motel bills. But advocates for the homeless view motels as a last resort — a place for families or individuals to go when rent or the mortgage cannot be paid, a deposit on a new residence is impossible, or shelters are full. And many people don’t realize that help is available, said Stacy Miller, the housing manager for Skagit Community Action Agency.

Miller said the agency sometimes offers motel vouchers when shelters are full or rental housing is still being worked out.

But some of the homeless would rather stay in a more expensive motel than end up in a shelter.

Jennie Wilcox, 37, lived at the Friendship House homeless shelter in Mount Vernon for a while when she first moved to Skagit County three years ago. But she felt constrained by shelter rules and exasperated by the drama that often played out among those living there.

When raw sewage recently flooded the basement of her Clear Lake rental house, Wilcox chose the Skagit Motel over a shelter.

Wilcox, her 10-year-old daughter and 3-year-old son live in a room with a single bed and cot. Until recently, her husband slept on the couch. The couple has since split up, she said.

Although their move was triggered by a sewage leak and not a job loss or other symptoms of the recession, Wilcox blames her displacement on the slumping economy.

Poor credit has made finding a rental home difficult, she said.

In addition, landlords are increasingly choosing to sell their properties rather than rent them.

“We were about to move in and rent it,” she said of a recent rental prospect. “But it had to be put up (for sale).”

Wilcox has been at the Skagit Motel for about a month and plans to stay until she can find a rental, with the help of the state Department of Social and Health Services, she said.

Community Action Agency provides help with down payments for rentals, Miller said. Additionally, the agency helps homeless families and individuals find housing through a two-year program called Transitional Housing, in which renters pay 30 percent of their income toward rent and the agency covers the rest. Another program through the agency, the Housing Assistance Grant Program, or HGAP, is focused on filling short-term housing needs.

Veirs said her family did not qualify for social services when they first became homeless. Now, they’re getting by and don’t want to take the assistance away from someone who really needs it.

“The way we looked at it was we are handling things OK right now,” Veirs said.

John Viers went back to work in October, but now makes $700 every two weeks instead of the $1,200 he used to bring home every week, his wife said.

She is hopeful that negotiations between the family’s attorney and AIG will come to a happy conclusion soon. Eventually, she said she hopes to repair her credit, rent a home and save up to buy a house, as her family planned before her husband’s injury.

But the average deposit for rentals in Skagit County is about $2,500, according to Miller, and that sum can be difficult to save, even in the cheapest local motel.

“Well, there is no way you can save up living in a hotel,” Miller said.

Elliott Wilson can be reached at 360-416-2147 or at .