Obama Signs New Federal Law Protecting Renters after Foreclosure

Thursday, May 21, 2009
Tenants Together

A new law passed by Congress and signed yesterday by President Obama provides protections for tenants whose landlords fall into foreclosure. Under the Helping Families Save Their Homes Act, tenants have the right to stay in their homes after foreclosure for 90 days or through the term of their lease. The bill also provides similar protections to housing voucher holders. The protections go into effect immediately and expire at the end of 2012.

At least one third of the units going through foreclosure in California are rentals. Under current law, most California tenants are entitled to 60-days notice of eviction after foreclosure. The new federal law increases this to 90 days.

In addition, California law provides that leases are extinguished by foreclosure, with limited exceptions. Many tenants enter into one year leases, only to find a few weeks or months later that the property is heading for foreclosure and that their leases will be extinguished. The new federal law provides that the lease survives the foreclosure, except that the lease can be prematurely terminated and the tenant given 90-day notice where a purchaser seeks to occupy the premises.

Some California cities have local laws prohibiting foreclosure evictions. The new federal protections do not preempt these laws which remain in full force.

"Congress and President Obama have shown real leadership here. Tenants are innocent victims of the foreclosure crisis, and it is about time they get some relief," noted Dean Preston, Executive Director of Tenants Together. "This bill will provide tenants 90-days notice of eviction, require banks to honor leases, and protect section 8 tenants after foreclosure. We look forward to the day when banks stop evicting innocent tenants after foreclosure, but until that day comes, this federal legislation will provide much-needed time for tenants across the country to find new housing and relocate. Senator John Kerry (D-MA), Representatives Keith Ellison (D-MN), Carolyn McCarthy (D-NY), Michael Capuano (D-MA), and Barney Frank (D-MA), deserve special praise for their efforts on this bill, as does the National Low Income Housing Coalition, a nonprofit organization that has been advocating for these tenant protections for over a year."

Tenants Together is California's only statewide organization for renters' rights. The organization operates a foreclosure hotline for tenants whose landlords are in foreclosure. In March 2009, Tenants Together issued Hidden Impact: California Renters in the Foreclosure Crisis, a comprehensive report on the impact of the foreclosure crisis on California renters. The report includes policy recommendations to stop foreclosure evictions of innocent tenants. The report is available at www.tenantstogether.org. Among the recommendations at the federal level are the protections signed into law by President Obama today.

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