Financial reform and consumer protections are the first things that spring to mind when most people think of the Dodd-Frank Wall Street Reform and Consumer Protections Act, but for lenders and other note-holders, start thinking about 90 days grace as well. The bill includes an extension of the Protecting Tenants at Foreclosure Act (PTFA) though the end of 2014[1]. This act affords renters whose landlords have lost their properties due to foreclosure the option and right to remain in the home for 90 days or through the end of their lease. Furthermore, any lease or tenancy created before the actual foreclosure occurred and the title was changed is protected under PTFA.
The National Low Income Housing Coalition (NLIHC) released an analysis in 2009 indicating that nearly 40% of families affected by foreclosure are families who were paying their rent and unaware that the landlord was no longer making mortgage payments. PTFA is a response to that analysis.
Do you think this “grace period” is a good solution to this problem?
Thank you for reading! Your comments and questions are welcomed below.
[1] http://nationalmortgageprofessional.com/news18939/nlihc-applauds-dodd-frank-reform-bills-protection-tenants
No. My understanding is whether a property is in foreclosure or not, those renting still owe the rent. The landlord who is not making the mortgage payment, on sale of the property has issue with the bank or note holder. Giving the grace days as described, penalizes the new owner.
does the bill protect tenants who caused the foreclosure by not paying their rent in the first place?
Good gawd. This is just another example of the government’s altruism with MY money and MY property. Even if I do go into foreclosure, it is mine ’till due process.
Who makes these crummy laws? It’s certainly nothing I VOTED for.
Let’s have a mroitorium on new laws and legislatures. Can the bums!
KDP
It’s good for the unsuspecting tenant. It gives them time to locate a new home to rent and prepare for the move.
So who is getting the screwing by having to allow people in the house for 90 days after it is foreclosed on? Do the renters have to keep making payments?
This is like too many things, not a very good solution to the problem! A better choice would have been to make it known to the renter of any late payment immediately, so they could be aware of what is going on and take appropriate action. Stay, move, ask the landlord.
This would be as simple as making it mandatory to send a letter to the address of the property stating the late payment. This would by-pass the loan holder and keep everyone above board at all times. You know that “transparency” thing we keep hearing about but never see any of!!
Beware of Multi-Family REO’s.
Twice we were burned…
In California foreclosure voids the lease. We had a tenant who stated the bank renewed her lease with no rent if she would look after what was otherwise an empty building… The REO agent told me that agreement was only until the building was sold… The tenant stated in court the agreement was a verbal lease valid until the renewal of the old lease. Nine months and $3,000 latter she agreed to pay rent – only to leave in the middle of the night trashing the apartment…
In Maryland we had a tenant who was a relative of the former owner who had given her a 5 year fixed lease including utilities for a fifth of the going rent…
Abuses abound…
Does PFTA legislation impact “short-sales”?
I think it’s only fair for the tenants. How many of us, in the course of our lives have asked a prospective landlord for a financial statement before we signed the lease? Close to nil, I’d suspect…. I think we’re going to see alot more of this coming with the tides of the commercial crashes…..
Dear Whomever,Seems the tenants got a letter from my mortgage comp,when I short sailed my property and new to call me to ask questions before the deal was done because they did not know I
had the property up for short sale..
While my heart goes out to the renters in that situation, I find this particular solution to be a mixed blessing. It will cause lenders to demand larger down-payments (and possibly larger impounds) to offset those potential losses. Although that’s a bad thing for retail buyers who buy with conventional financing, it might help to boost the market for more deals with creative financing. It will force retail buyers to pass over these REOs, or wait for the expiration of the underlying leases or that 90 days. Unless some exceptions are made, it will strongly discourage retail buyers from participating on short-sales on non-owner occupied properties. And the list goes on. . . .
My Neighbor for 13 years rented her front house to a family last year while she lives in the small back house. Stupidly, she didn’t get a signed lease and they stopped paying rent since 3 months ago. Also, they never paid the utilities as they agreed and are 7 G’s in arrears. Unfortunately, the untilities are in the owners name. She gave her tenants a 3 three days notice to vacate, and they SUED her. I went to court with my neighbor for 3 days last week and she lost on a technicality that she hadn’t registered her property with Los Angeles city before renting it to them. (The lawyer representing her wasn’t good). Now my neighbor is in arrears on the mortgage and doesn’t have the money to pay it and it looks like she may have to foreclose. I am unhappy with the fact that these renters (who are in the U.S. illegally) will probably be able to go on living there paying no rent through the foreclosure process while my friend loses her property to the bank. (!)