Impact of Foreclosures on Section 8 Housing Choice Voucher Program (HCVP) Tenants and Project-Based Section 8 Tenants

In the Protecting Tenants at Foreclosure Act, Pub. L. No. 111-22, §§ 701-704, Congress provided that purchasers of property at foreclosure take subject to existing leases and must provide tenants, including Section 8 voucher tenants, with a 90-day notice prior to eviction. In addition, the law provides Section 8 voucher tenants with additional protections. When there is a Section 8 tenancy, the new owner takes subject not only to the Section 8 voucher lease but also the Section 8 Housing Assistance Payments (HAP) contract. During the term of the lease, the new owner may not use the foreclosure to evict the residents because it does not constitute good cause, except if the new owner intends to occupy the unit as a primary residence and provides the tenant a notice to vacate at least 90 days before the effective date of such notice.

Project-based Section 8 tenants are not subject to Section 703 of the Protecting Tenants at Foreclosure Act. However, such tenants are protected by Section 702. A new owner takes title subject to the Section 8 lease, which provides that a tenant may not be evicted except for good cause. Good cause includes tenant misbehavior, but does not include a business reason, such as foreclosure. Many Section 8 Housing Assistance Payment (HAP) contracts provide that the HAP contract continues in effect after foreclosure.

Articles

NHLP, HUD, States Take Additional Steps to Protect Tenants in Foreclosed Properties

This February 2010 NHLP Housing Law Bulletin discusses HUD Notice PIH 2009-52 that imposed new responsibilities on PHAs to implement the tenant protections provisions in the PTFA and NSP.

NHLP, Foreclosure and Section 8 Tenancy: Federal Legislative Developments

This August 2009 NHLP Housing Law Bulletin discusses how to interpret the then recently enacted Protecting Tenants at Foreclosure Act.

Cases

Federal Home Loan Mortgage Corporation v. Monahan

A Section 8 tenant was sued for eviction in violation of federal law requiring good cause, Emergency Economic Stabilization Act of 2008 and local law.

Materials

Sample letters and notices implementing the Protecting Tenants at Foreclosure Act

•Sample letter for Section 8 tenants to send to owners who acquired property through foreclosure and are seeking to evict the resident.
•Sample letter to send to public housing agency explaining the new law.
•Sample letter to send to state courts that handle eviction cases.
•Notices explaining tenants’ rights under the new law.

Sample PHA Administrative Plan Comments on PTFA

These comments were submitted to the Housing Authority of the County of Los Angeles regarding the implementation of the Protecting Tenants at Foreclosure Act.

Statutes and Regulations

Protecting Tenants at Foreclosure Act

• Text of the Protecting Tenants at Foreclosure Act of 2009 as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Pub. L. No. 111-22, 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 Protecting Tenants at Foreclosure Act

HUD Guidance

• 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)
• HUD PIH Notices 2009-52, 2010-49, and 2011-68 impose new obligations on Public Housing Agencies (PHAs) to implement the tenant protections provisions in PTFA and ARRA.
• Revised HAP Contract and Tenancy Addendum with specific references to PTFA