It should come as no surprise that the industry who created and
pushed complex and risky loan products to American homeowners have even
less regard for tenants who are victims of foreclosure. As explained
more here,
Congress and President Obama enacted the “Protecting Tenants at
Foreclosure Act” in May 2009 which entitles a tenant to continue
leasing from the new owner of the property after a foreclosure sale
until the lease expires on its own, or 90 days (whichever is longer).
The only exception is if the new owner intends to occupy the property
as his primary residence.
Lenders apparently did not consent to the law. Rather than show up
to congressional townhall meetings and scream, some it seems may be
attempting to trick tenants into leaving by drafting misleading and
complex notices to vacate and sending them to the occupants of the
property after every foreclosure. If they will dupe homeowners, why
not tenants too?
For example, the law firm of Barrett Daffin Frappier Turner &
Engle, LLP (”a national law firm dedicated exclusively to the mortgage
banking industry” article),
sent an “Occupant” of a home in Pflugerville, Texas a three page letter
on behalf of the Bank of New York Mellon on August 13, 2009. The first
page boldly states in very large 18 point type:
IMPORTANT INFORMATION IS CONTAINED WITHIN THE ATTACHED NOTICE.
PLEASE READ CAREFULLY
BARRETT DAFFIN FRAPPIER TURNER & ENGLE, LLP IS A DEBT
COLLECTOR ATTEMPTING TO COLLECT A DEBT. ANY INFORMATION OBTAINED WILL
BE USED FOR THAT PURPOSE.
Here is the letter (with the full address and loan number redacted).
So, a tenant who has been paying her rent to a landlord who may not
even know a foreclosure sale has occurred is going to be interested in
carefully reading this inviting letter addressed to Occupant? Here
is a case out of Barstow where the tenant did not know anything and the
landlord was still collecting the rent (and Barrett Daffin did the
foreclosure).
If a tenant were to read the letter, might they be a little worried
to call this firm to get more information? I suspect some tenants
might believe they are somehow liable to this law firm or someone else
and be afraid to call. Not to worry though the letter is unsigned and
does not even have a person’s name on it to call, just the phone number
and suggestion to call the “Eviction Department” for questions; but
that is at the end of page two of the letter and I am getting ahead of
myself. The bottom line is that most tenants may not even read past
the first page.
The second page actually looks like a letter, but the text was
shrunk to 8 point type with exceptions of the name of the firm, the
Occupant’s address, the words “Notice to Vacate” in some form printed
boldly four different times and the lender (as trustee of a securitized
trust). What does that tell the average person?
OCCUPANT blah, blah, blah, blah, blah.
ADDRESS blah, blah, blah, blah, blah.
NOTICE TO VACATE blah, blah, blah, blah, blah.
BANK blah, blah, blah, blah, blah.
NOTICE TO VACATE blah, blah, blah, blah, blah.
VACATE THE PREMISES blah, blah, blah, blah, blah.
NOTICE TO VACATE TO BONAFIDE TENANT(S) blah, blah, blah, blah.
LAW FIRM blah, blah, blah, blah, blah.
Don’t believe me, look at the letter yourself here.
The letter is addressed on both the first and second pages to the
“Occupant,” not the debtor or the homeowner. Clearly the notice is
meant to provide “Important Information” to any occupant regardless
because the lender does not know who is living there. Fine, but I
wonder if providing important legal information to another person
constitutes legal advice? I wonder if providing legal advice to
another person makes that person a client? Hmmm.
Anyway, while we know that this new owner of property purchased at a
foreclosure sale must honor an existing lease agreement a bonafide
tenant had with the previous owner (unless Bank of New York Mellon
plans to move to Pflugerville), this letter addressed to any occupant
(and the occupant was a tenant) is titled:
RE: NOTICE TO VACATE the premises at
XXX SOMETHING DR
PFLUGERVILLE, TEXAS 78660
The letter just keeps getting better. After stating the full name
of the new owner (not just “The Bank of New York Mellon” which would be
sufficient in order to sue it for example), the letter lists the entire
name of the former entity that was the bank and then the trust that
probably once held the loan that was foreclosed on (i.e., The Bank of
New York Mellon formerly Known as the Bank of New York, as trustee for
the Certificateholders CWALT, Inc., Alternative Loan Trust 2006-26CB,
Mortgage Pass-Through Certificates). And I spared you plenty … the
full name of the trustee, the old name of the trustee and the name of
the trust is actually listed in the letter in all capital letters,
bolded, and underlined … TWICE in the first two sentences of the
letter. No kidding.
If you managed to read the letter this far, after getting some
glasses to make out the 8 point type (I measured it) that is not in all
capital letters, underlined, and bolded; the third sentence explains
one provision of the deed of trust that the lender wants you to know:
The Deed of Trust provides that any person in possession of this property is a Tenant at Sufference and may be removed by Writ of Possession.
Sounds pretty scary I would think — this must be the important
information they wanted to share as they promised on the first page.
The question most might have after reading this: ”Am I going to get
arrested for being a tenant at sufference?” The next heading is then
another “Notice to Vacate” in all caps, bolded and underlined, with the
next sentence “This letter constitutes formal and final demand that you
VACATE THE PREMISES
located at … within three (3) days of the date … If you fail to comply
with this demand, this firm has been authorized to file suit against
you immediately or at our option, after ten (10) days … in the latter
event, if you have not vacated within ten (10) days … you may be liable
for the attorney’s fees and costs of court which have been incurred.”
And the next heading says “NOTICE TO VACATE TO BONAFIDE TENANT(S)“.
Nevermind that a tenant who has a lease can continue to lease from the
new owner, they are giving all of them a notice to vacate, and this is
fourth time they said so without exception. The first sentence under
this heading gives tenants “without a lease or with a lease terminable
at will under applicable Texas law” 90 days to vacate. What leases are
terminable at will? It does not say; this is not the important
information they want you to know.
Finally at the bottom of the letter the lender, through
counsel, decides to mention some of the law that might be applicable,
but hedging where it could:
Subject to the terms of the Act, if you are a bona fide
tenant and you are occupying the premises under a bona fide lease that
you entered into before the notice of foreclosure, you may be entitled
to occupy the premises until the end of the remaining term of the lease.
Then the lender demands the tenant supply its lawyers with a copy of
the lease agreement or other evidence of the tenancy within 10 days of
the letter otherwise the lender has authorized an eviction case be
filed against the tenant. While the letter admits that the failure to
confirm your status as a tenant within 10 days does not waive your
rights (since it is not in the Act), it does mean that tenants who are
vacationing, visiting friends, taking care of sick family members,
working out of state, etc. at the wrong time will be evicted who should
not have been because this firm was told to do it. (Eviction papers do
not have to be personally served in Texas (Rule 742a),
and even after service on the property, the defendant is still required
to appear within 6-10 days otherwise a default judgment can be entered
per Rule 739 of the Texas Rules of Civil Procedure.)
For the ones that don’t read the letter at all because of its
friendly beginning or fail to respond with proof of their lease
satisfactorily in time, they will be sued in court for eviction. And
if their name is ever used in the filing, the tenant will be victimized
yet again regardless of the outcome of the case because in this age,
mere eviction filings are tracked by special tracking services and it
rarely makes any difference to a landlord what the circumstances were —
just having an eviction filed against you is a major negative.
The letter closes with a warning that the letter warrants attention,
to call the Eviction Department with questions, and that any
information obtained will be used by them as a debt collector.
I don’t believe that one lawyer wrote this letter in a vacuum, and
I am not blaming the law firm of Barrett Daffin unlike some judges who
have sanctioned them for their conduct. See article here
claiming to list the firm’s srcapes. It was undoubtedly written by a
group of many lawyers that represent the industry, and the industry,
including this lender must have seen and approved this letter. I was
told I might see a version of this letter being used across the
country. (”Ver-16″ appears at the bottom, so one might think there are
at least other 15 versions.) Barrett Daffin is merely said to represent
“many of the nation’s leading mortgage banking organizations in matters
ranging from contract enforcement to regulatory compliance. The firm
and its affiliated companies have more than 700 employees dedicated to
serving its clients and their customers.” See article here
which ironically but not surprisingly also mentions Barrett Daffin’s
continued financial support of NeighborWorks’s pathetic foreclosure
prevention program (see article on NeighborWorks here).
The industry wrote this letter. Of course the industry will claim
that it does not know if a tenant or the former homeowner is occupying
the property after a foreclosure, which is probably true. Thus, the
letter must be contingent. Agreed. The problem is that one might
easily demonstrate that whether by design or default this letter will
deceive tenants — the people that Congress and the President intended
to protect with this new federal law. Rather than embrace the law, the
industry is likely hoping to blunt it with letters like these. If this
letter was not meant to trick tenants into leaving immediately, it
would be hard to imagine one that was. Read it and decide yourself here.
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