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Tenants Together and the California Reinvestment Coalition (CRC) are collecting data on complaints about violations of the Protecting Tenants at Foreclosure Act (Pub. L. No. 111-22), which requires that persons or entities that take title to residential property at foreclosure honor the existing tenants lease, and give at least 90 days notice to vacate if they want the property empty. Complaints can be filed with the Office of the Comptroller of the Currency, which regulates federally chartered banks. If you file a complaint, please send a copy it to Kevin Stein at California Reinvestment Coalition, kstein@calreinvest.org, Dean Preston at Tenants Together, dean@tenantstogether.org, and David Rammler, drammler@nhlp.org, at the National Housing Law Project.
There are estimates that nationwide as many as 40% of the families that face eviction due to foreclosure are renters. Depending upon the local market, this percentage may vary. The consequences for tenants residing in properties that have been foreclosed upon are often dramatic, and may include lease termination, eviction without proper notice or a reason other than the unit has been foreclosed upon, the loss of the tenant’s security deposit, deterioration of property conditions and utility shutoffs. Tenants also face costs of relocation, finding a new home, possible loss of a Section 8 voucher or other rental assistance, an eviction complaint which may affect their credit or the ability to lease another unit, and possible disruption of education, employment, medical treatment and social support networks.
Congress has responded to the crisis in a dramatic and strategic fashion. The Protecting Tenants at Foreclosure Act (PTFA), enacted and effective May 20, 2009, requires that owners acquiring property through foreclosure honor existing leases. Tenants with term leases may not be evicted until the end of their lease terms and not without a 90-day notice. There is one variation on this rule. The new owner who seeks to occupy the unit as a primary residence may terminate the lease with a 90-day notice. A new owner must provide a 90-day notice to tenants with no leases or leases terminable at will. The act also provides additional protections for Section 8 tenants.
Recently, Congress clarified and extended the PTFA in the Dodd-Frank Wall Street Reform and Consumer Protection Act, which the President signed into law on July 21, 2010. Section 1484 of the Act clarifies that notice of foreclosure means, “the date on which complete title to a property is transferred to a successor entity or person as a result of an order of a court or pursuant to provisions in a mortgage, deed of trust, or security deed.” The Dodd-Frank Act therefore confirms that the PTFA protects all bona fide tenants that entered, or will enter, into a lease agreement before the transfer of complete title to the new owner. Originally the law governed foreclosures until December 31, 2012, but the Dodd-Frank Act extends that date to December 31, 2014.
State law responses to the effect on tenants of the foreclosure crisis have varied and include providing tenants in foreclosed properties with increased notice before eviction, requiring entities that purchase property at foreclosure sales to maintain the property, requiring utility companies to continue to provide utilities post foreclosure, and requiring the new owner to be responsible for the tenant’s security deposit. In addition, in jurisdictions requiring just cause to evict, state and local laws have been interpreted to prevent eviction due solely to a foreclosure and, recently, have been expanded to cover all foreclosed upon units.
RWW Properties v. Stepanoff, No. N10-0072 (Cal. Super. Ct. App. Div. May 25, 2010)
Holding that the PTFA only applied to federally related mortgages, a California Superior Court judge allowed a tenant to be evicted on only a 30-day notice after foreclosure. On appeal, the appellate division reversed and instructed the trial court to dismiss the eviction.
Fed. Nat'l Mort. Assoc. v. Dobson, No. 10-CVG-02140 (Ohio Mun. Ct. Mar. 1, 2010)
Unless proven otherwise, an existing tenant is presumed to be a bona fide tenant protected under the PTFA.
Bank of America v. Owens, 2010 NY Slip Op 20164 (Rochester City Ct. May 5, 2010)
A post-foreclosure owner may not require tenants to prove bona fide tenancy within five days to avoid its obligation to provide 90-day notice under the PTFA. If the owner has not provided the required 90-day notice, the burden is then on the owner to demonstrate that a property resident is not a bona fide tenant.
Burson v. Auth
A Maryland court held that the PTFA applied to a property sold at a pre-May 20, 2009 foreclosure sale.
Foreclosure and Section 8 Tenancy: Federal Legislative Developments (Aug. 2009)
This August 2009 Housing Law Bulletin provides a detailed analysis of the Protecting Tenants at Foreclosure Act with attention to its implications for Section 8 voucher program participants.
Interpreting the Protecting Tenants at Foreclosure Act: Case Law and Future Litigation (Aug. 2010)
This August 2010 Housing Law Bulletin summarizes recent case law interpreting the Protecting Tenants at Foreclosure Act.
Will Fannie Mae’s Lead in REO Rental Policy Set the Standard for the Private Market? (Feb. 2009)
This February 2009 NHLP Housing Law Bulletin discusses Fannie Mae’s policy regarding tenants in foreclosed properties that had Fannie Mae mortgages.
Lenders, Government Entities Ramp Up Foreclosure Prevention Efforts (Nov.-Dec. 2008)
This November-December 2008 NHLP Housing Law Bulletin discusses protections in EESA for tenants in foreclosed properties.
Stop Shutting the Door on Renters: Protecting Tenants from Foreclosure Evictions (May 2010)
This Cornell Journal of Law and Public Policy article discusses existing and proposed federal and state laws affecting tenants’ rights in foreclosure.
Agencies Begin Implementing the Protecting Tenants at Foreclosure Act (Oct. 2009)
This October 2009 Housing Law Bulletin updates readers on actions taken by the Federal Reserve, the Office of Comptroller of the Currency, the National Credit Union Administration, the Office of Thrift Supervision, and the National Association of Realtors. The article also discussed floor statements regarding the purpose of the act by Senators Dodd and Kerry.
•Sample letter to send to Public Housing and Section 8 HCV Administrators
•Sample Letter for Section 8 Tenant to Send to New Owner
•Sample Letter for Non Section 8 Tenant to Send to New Owner
Webinar: Tenants in Foreclosure: New Federal Protections (June 10, 2009)
Please Note: The link starts a webinar presentation. It may take several minutes to connect and start.
Webinar for Lenders on Protecting Tenants at Foreclosure Act (Sept. 22, 2009)
The Protecting Tenants at Foreclosure Act (Pub. L. No. 111-22) requires that persons or entities that take title to residential property at foreclosure honor the existing tenants' lease and give at least 90 days notice to vacate if they want the property empty. Presentation materials are available here.
Sample Pleadings for HJN Members
This pleadings bank includes materials to assist advocates defend tenants in post-foreclosure evictions. There are also affirmative complaints seeking compensation for damages that result from post-foreclosure evictions and lockouts.
Protecting Tenants at Foreclosure Act of 2009 (PTFA)
• Text of the Protecting Tenants at Foreclosure Act of 2009 as clarified and extended by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Pub. L. No. 111-22, div. A, tit. VII, §§ 701-704, 123 Stat. 1632, 1660-62 (enacted May 20, 2009), as amended by Pub. L. No. 111-203, tit. XIV, § 1484 (July 21, 2010)
• White House press release accompanying the Helping Families Save Their Homes Act
• Comments of Senator Kerry and Senator Dodd on implementation of the Protecting Tenants at Foreclosure Act (Aug. 6, 2009)
• The recently introduced Permanently Protecting Tenants at Foreclosure Act of 2010 would remove the sunset date from the PTFA (introduced Mar. 4, 2010)
Federal Agencies' Guidance on Protecting Tenants at Foreclosure Act
• Department of Housing and Urban Development (HUD) Notice of Responsibilities Placed on Immediate Successors in Interest Pursuant to Foreclosure of Residential Property (June 24, 2009)
• Federal Reserve System Consumer Affairs Letter (July 30, 2009)
• Office of the Comptroller of the Currency (OCC) Bulletins 2009-28 (Aug. 2009) and 2010-2 (Jan. 2010)
• National Credit Union Administration (NCUA) Regulatory Alert (Aug. 2009)
• Office of Thrift Supervision (OTS) Memorandum (Sept. 2, 2009)
• FDIC Financial Institution Letter (Sept. 28, 2009)
Tenants Together: California Statewide Organization for Renters’ Rights
Among their other resources, Tenants Together offers Hidden Impact: California Renters in the Foreclosure Crisis (May 2010) and a hotline for California tenants in foreclosure situations.
National Association of Realtors
NAR's guidance to realtors on Tenant Protection Provisions Contained in Public Law 111-22, Q&A on Tenant Protections
National Low Income Housing Coalition
NLIHC has a web page clearinghouse for the implementation of ARRA and also offers Renters in Foreclosure, with links to articles and research related to tenants and foreclosure.
REO Rental Policies
Fannie Mae’s national REO rental policy
Freddie Mac’s rental policy initiative
Deutsche Bank Memorandum on Laws, Rules and Regulations in Connection with Foreclosures on Securitized Assets (August 30, 2007)
National Law Center on Homelessness and Poverty
National Law Center on Homelessness and Poverty published Staying Home: The Rights of Renters Living in Foreclosed Properties (June 2010), a report explaining the Protecting Tenants at Foreclosure Act and summarizing state laws that protect tenants in foreclosed properties.
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