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Renters Have Immediate Protections From Foreclosure Under New Law

Wednesday, June 3, 2009

Renters Have Immediate Protections From Foreclosure Under New Law

The new law, the Helping Families Save Their Homes Act, provides renters with a minimum of 90 days notice before tenants must vacate a property.

(Washington, DC) - Renters whose landlords fall into foreclosure will have new protections from evictions under new legislation signed by President Barack Obama May 20, 2009.

The new law, the Helping Families Save Their Homes Act, provides renters with a minimum of 90 days notice before tenants must vacate a property. If a buyer plans to use the property as his primary home, or the tenant’s lease is month to month, or there is no lease at all, the tenant is entitled to at least 90 days notice. Also, renters must now be allowed to remain in their homes for the duration of their lease, even if the home is being foreclosed on. This also applies to Section 8 tenants.

“One of the most overlooked problems in the foreclosure crisis has been the eviction of renters in good standing from homes that go through foreclosure because the owners of those homes, unbeknown to the renters, have not been paying their mortgages,” said Commissioner Thomas E. Hampton of the DC Department of Insurance, Securities and Banking (DISB), the District government regulator for the financial-services industries. “By providing homeowners and lenders with new and improved tools to combat foreclosures, we can help lessen the impact this plague is having on the neighborhoods and communities in the District of Columbia.”

According to President Obama, the law was an important step toward stabilizing and reforming the nation’s financial and housing markets—helping American homeowners and increasing the flow of credit. The legislation is expected to strengthen the nation's housing sector and facilitate the goals of the administration's Making Home Affordable Program by helping millions of American homeowners stay in their homes.

Among other provisions, the Helping Families Save Their Homes Act would expand access to the Hope for Homeowners Program, by lowering fees, streamlining certification requirements, and allowing for incentive payments to servicers, among others.  The law will also increase funding for foreclosure prevention efforts by $130 million; establish protections for renters living in foreclosed homes, including Section 8 tenants; provide comprehensive new resources for the homeless; and increase borrowing authority both for the Federal Deposit Insurance Corporation and the National Credit Union Association.

The National Low Income Housing Coalition (NLIHC) estimates that nationwide, 40 percent of the households that lose their homes because of foreclosure are renters. The NLIHC is dedicated to achieving socially just public policy that assures people with the lowest incomes in the United States have affordable and decent homes.

These new tenant protections are effective immediately, and expire December 31, 2012.

For more information, call DISB at (202) 727-8000.