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FORECLOSURE CRISIS TAKES
TOLL ON RENTERS
Industry data suggests by the end of 2010,
more than 5 million homes had been foreclosed
on as a result of the recent housing crisis, and
some anticipate another 8 million to 10 million
more will make their way through the foreclosure pipeline over the next few years.
The National Law Center on Homelessness
and Poverty (NLCHP) points out, however,
these headline numbers are only part of the
picture. About 20 percent of all foreclosed properties have been rental properties, according to a
recent NLCHP report. In fact, about 40 percent
of all families evicted in foreclosure are renters
not owners, according to NLCHP.
"Renters are innocent bystanders caught in
the crossfire of the foreclosure crisis, becoming
vulnerable to homelessness through no fault of
their own," NLCHP stated in its report titled
"Eviction (Without) Notice: Renters and the
Foreclosure Crisis."
In 2009, the federal government enacted the
Protecting Tenants at Foreclosure Act (PTFA),
which is set to expire at the end of 2014. Under
48
PTFA, tenants are allowed to continue living in
their rental properties throughout the duration
of their lease, even if their rental property is
foreclosed. If a tenant has a short-term lease or
no lease, the new property owner must give a
90-day notice to all tenants before eviction.
NLCHP, however, found evidence that
"violations of the PTFA are widespread across
the country," and tenants are often uninformed
about the law protecting them. Often, new
property owners fail to communicate with tenants or provide "illegal, misleading, or inaccurate written notices," according to an NLCHP
survey.
At times, new property owners fail to maintain the property for tenants, and NLCHP also
found instances of "harassment from real estate
agents, law firms, or bank representatives."
As a result of its findings, NLCHP recommends Congress appoint one federal agency
to enforce PTFA. The group also advises bank
regulators to monitor compliance with the law
to ensure tenants are protected. In addition,
NLCHP encourages states to enact increased
protections for renters when their landlord faces
foreclosure.
NLCHP expects the foreclosure crisis to
continue for the next several years. Therefore, the
group advises Congress to strengthen PTFA's
temporary renters' protections by making it a
permanent law.
KNOW THIS
Bank lending to
both consumers
and businesses
has been rising
since March
2011, according to
Capital Economics.
