California Attorney General Announces Investigation into Banks’ Treatment of Tenants after Foreclosure

Wednesday, June 30, 2010
Tenants Together

For Immediate Release: June 30, 2010

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the urging of housing advocates, California’s Attorney General, Edmund G. Brown
Jr., has launched an investigation to ensure compliance with tenant-protection
laws by banks and private investors acquiring tenant-occupied, foreclosed
properties. The investigation, announced
this week, comes after Tenants Together and 20 allied housing rights and public
interest groups from across California brought rampant violations of tenant
protection laws to the attention of the Attorney General. The coalition urged
Attorney General Brown to take action
in response to a pattern of illegal
conduct and tenant harassment by banks, real estate agents, and lawyers in
their treatment of tenants after foreclosure.

who live in properties in foreclosure are the forgotten victims of the collapse
of the housing market,” Attorney General Brown said. “We’ll fight every step of
the way to ensure they aren’t rousted from their homes in violation of the

its 2010
report: California Tenants in the Foreclosure Crisis
, Tenants Together
conservatively estimates that at least 37 percent of foreclosed units are
rentals, directly affecting more than 200,000 tenants annually.

praised the Attorney General’s announcement. According to Dean Preston, Executive Director at Tenants Together, “We
commend Attorney General Brown for moving forward to stop the illegal
displacement and harassment of innocent tenants. Banks acquiring tenant-occupied foreclosed
properties have shown a complete disregard for tenant-protection laws. Unless they are held accountable, they will
continue to devastate communities across the state.”

Attorney General’s press
provides further detail on the demands to the industry:

As a part of his investigation,
Brown today sent letters to 24 banks, loan servicers, private investors, and
law firms demanding information about whether they are complying with federal,
state, and local laws regarding foreclosed properties and their treatment of
tenants… In his letter, Attorney General
Brown requires banks, loan servicers, private investors and law firms to
provide information by July 19 about their policies and procedures when dealing
with foreclosed properties and current tenants. It specifically asks the recipients to outline
how they ‘promote or preserve tenancies after foreclosure.’

federal Protecting Tenants at Foreclosure Act (PTFA) became law in May 2009, expanding
tenant rights in the foreclosure context and clarifying that post-foreclosure owners
step into the shoes of the pre-foreclosure owner and have all obligations of
landlords toward their tenants. Under
the federal law, tenants have the right to a 90-day notice to vacate after
foreclosure. The law also specifies that
leases survive foreclosure, giving most tenants the right to remain in their
homes through the end of the lease. In
addition, tenants who live in cities with just cause for eviction laws may have
the right to remain indefinitely after foreclosure.

owners are responsible for widespread violation of these laws. According to Gabe Treves, Program Coordinator
at Tenants Together, “banks and private investors routinely displace tenants in
violation of tenant-protection laws. One
of the biggest problems is that they contract with real estate agents and
eviction lawyers that harass and mislead tenants into moving out of their homes

Together operates a hotline for tenants in foreclosure situations. Since launching in March 2009, the Tenant
Foreclosure Hotline has counseled over 4,000 tenants.

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