This article is another detailing Fannie Mae’s refusal to adequately implement the Protecting Tenants at Foreclosure Act (PTAF or sometimes PTFA). So Fannie Mae was quick to mention in response to an earlier article that it technically did not do anything wrong because the letter was not received by a bonafide tenant (which was true). See article here, and article where Fannie blames its lawyers for the bad letter here. Well below is an example Fannie Mae, their lawyers, and their realtors might have trouble explaining (description begins under video). Video below generally describes the law and the problem:
A tenant had a one year lease with landlord to rent a condo in Austin, Texas for $1,190 a month. The lease is here. The landlord and the tenant were not related in any way (so the tenant qualifies under the Protecting Tenants at Foreclosure Act or PTAF for short). Article describing more about the law here.
It seems the landlord was receiving the rent, but not paying his mortgage payments to the lender so Fannie Mae foreclosed December 2, 2009. On December 11, 2009, a realtor visited with the tenant and gave him a Fannie Mae document called “Know Your Options”, copy here. This document does not mention PTAF rights at all, and the realtor either was unaware of PTAF or did not care to know about it because she was not interested when the occupant explained he was a tenant. (Fannie has other versions of “Know Your Options” that mention PTAF but it appears their agents use the version they prefer.)
On December 29, 2009, the realtor returned and provided another document to the tenant here, that also did not mention the tenant’s rights under PTAF. The tenant reports that the realtor basically wanted the tenant out so she could sell the property and implied an eviction would be coming soon if he did not leave.
The realtor was correct. The tenant received a letter here dated February 5, 2010 from Barrett Daffin Frappier Turner & Engel which was very familiar — it was the same letter that was sent out as referenced in the earlier posting, article here. The letter says Fannie Mae owns the property and the “Occupant(s) and/or Tenant(s)” must vacate within 3 days otherwise suit will be filed immediately or at their option after 10 days which will entitle them to attorney fees. The letter expressly states that if the occupant is a tenant, “Fannie Mae has chosen not continue your lease and therefore you are no longer entitled to possession”. (The letter gives the tenant 30 days to move if the tenant had already paid rent prior to getting the notice.) Copy of the letter sent to the bonafide tenant here.
The tenant did not move by the deadline in the letter, and Fannie’s law firm did what it promised. On February 9, 2010, an attorney for Barrett Daffin Frappier Turner & Engel executed an affidavit that was a part of the eviction papers filed in justice court that read:
My name is …. I am agent and attorney for Plaintiff and as such, I am authorized to make this Affidavit on their behalf. I have read the foregoing Original Petition for Forcible Detainer and the statements made therein are within my personal knowledge and are true and correct.
Original Petition for Forcible Detainer filed February 11, 2010, here.
The petition also states one thing very clearly:
In accordance with Section 24.005 of the Texas Property Code and also in accordance with the Protecting Tenants at Foreclosure Act of 2009, written demand was made upon Defendant(s) to vacate the premises located on the Property.
Paragraph VII, Original Petition for Forcible Detainer filed February 11, 2010, here.
How exactly was the letter proper notice under PTAF? Fannie must honor the tenant’s lease or give the tenant 90 days notice (it did neither). Of course, Fannie’s attorney will undoubtedly claim she did not know a tenant was renting the property. However, the affidavit that says the attorney has personal knowledge. Either the attorney did not have personal knowledge and the affidavit is false, or the attorney did know there was a tenant in the property and she ignored the law, making the affidavit false.
Fannie’s letter is inappropriate on its face — the letter contemplates that a tenant occupies the property and yet states the new owner is not honoring the lease agreement. If Fannie Mae claims it was told that the former homeowner was occupying the property (thus not entitled to PTAF protection), it should have addressed the letter to the former homeowner, and then included language that says “we understand that the occupant of this property is the former owner, if you are actually a bonafide tenant under PTAF, we will honor your lease or give you 90 days notice, please contact us, etc.” If the firm knows a tenant is living in the property, but not one entitled to protection under the Act, they can specify that too. Instead they use a blanket letter regardless of the situation that is deceptive to bonafide tenants. There are many ways to do this right, and this is not one of them. How will bonafide tenants know to complain or object unless they know the law already? They won’t and Fannie and its lawyers know it. This system is designed to trick people out of their rights plain and simple.
It appears this happened to another tenant of Fannie Mae who knew better and was not afraid to speak up:
I don’t particularly desire to become the landmark legal precedent cited by future tenants fighting for their rights under the PTAF, but I am willing to do so on principle as I’ve been taught to stand up for what’s right in my more than 20 years service to the nation in the Marine Corps and Air Force.
Ken Hall, February 20, 2010, post here.
Another here, and here, Fannie Mae claims that it has told its vendors to follow the law and use the correct forms. Fannie says it tries to correct a problem once it finds it. For example, when notified of the tenant described at the top of this post, Fannie had its lawyers put a hold on the eviction case (it did not request dismissal even though the case is utterly defective, if not illegal and unethical). Fannie’s attempts are half-hearted at best. Fannie Mae simply refuses to do things the right way to avoid these “mistakes”. Meanwhile Fannie appropriately refuses to sign a certification that it is complying with PTAF (they just let their lawyers do it in eviction cases), which prevents the Neighborhood Stabilization Program from progressing at least in Texas, see article here.
It might appear that affirmative class action relief and other appropriate action should be taken against Fannie Mae, its attorneys, and agents to get their attention. The law was effective in May 2009; that is enough time for proper implementation. Fannie sure managed to accept billions in taxpayer money and implement that quickly. I think the taxpayers deserve equal attention when it comes to their rights.
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