Buried in a housing law signed last week by President Obama are protections that will help thousands of renters stay in their homes — at least for a while — after their landlord has been foreclosed on.
The law allows tenants to remain in their foreclosed rentals through the end of their lease and then 90 days after that before being forced to vacate by the lender. Renters without leases will have 90 days, a significant improvement over what most received before: almost no notice at all.
"Until this law was enacted, there had been no national protections for any of these households," said Linda Couch, deputy director at the National Low Income Housing Coalition. "This gives renters time to adjust their lives."...
The National Low Income Housing Coalition estimates 40 percent of foreclosed properties in the country have renters and the new law could aid tens of thousands of renters.
Before, many renters booted out of foreclosed homes would have to find emergency shelter with family or friends because they have little savings to cover moving costs, first month’s rent and a security deposit at another apartment. In the worst cases, some families are forced into shelters for temporary housing.
While [ Francis Creighton, vice president of the Mortgage Bankers Association] said renters are "blameless" in these situations, honoring their leases could disrupt a foreclosure sale as new owners try to move in. Other times, lenders have no idea renters live in the properties, Creighton said, because the landlords claimed the property was their primary residence, not a rental, to qualify for a lower mortgage rate.
One point not mentioned in the article is that the prior to the new law renters would lose all their money - their deposit, their last months rent and the rest of the months rent they had already paid. Perhaps they could try to sue after they re-organized their lives. Getting two days notice to move for most people would be impossible and unbelievable stressful. Many of these renters had no idea what was coming.
In the past there were two contracts involved - one for the renter (sometimes written and sometimes verbal) and the other for the mortgage. The mortgage contract voided the rental agreement everywhere but Jersey and D.C. Now it is the law of the land! Good news for renters everywhere!