July 30th, 2010 10:40 AM by Lehel S.
Dodd-Frank Legislation Extends Protecting Tenants at
Renters who find themselves indirect victims of foreclosure were not forgotten in the financial reform legislation signed by President Obama on Wednesday.
The Dodd-Frank Wall Street Reform and Consumer Protections Act will extend the Protecting Tenants at Foreclosure Act (PTFA) through the end of 2014.PFTA provides renters whose landlords have lost their properties to foreclosure the right to stay in the home for 90 days after the foreclosure or through the term of their lease.
Under PTFA, housing choice voucher holders are offered similar protections. The Dodd-Frank bill also clarifies that any lease or tenancy created prior to the change of title as a result of foreclosure is protected by PTFA.
The National Low Income Housing Coalition (NLIHC) is one of many organizations to commend lawmakers for including language that further protects tenants from the perils that accompany foreclosure.
The organization says renters are often the overlooked victims of the mortgage crisis. Because renters tend to have lower incomes than homeowners, their loss of home due to foreclosure is more likely to lead to homelessness, NLIHC notes.
PTFA was enacted in May of 2009, but was originally set to expire on December 31, 2012. NLIHC championed PTFA after the organization’s analysis of foreclosure data showed that as many as 40 percent of the families affected by foreclosure are renters. The nonprofit group says these families often have no idea that their landlord is delinquent on the mortgage, and have usually continued to pay their rent while their landlord has failed to make mortgage payments.
Before PTFA, the rights of tenants at foreclosure were governed by state law. And NLIHC says that in most states, such tenants received little or no notice before they were forced to move.
The Dodd-Frank Reform Act also includes a provision that requires the HUD secretary to develop a program to refinance troubled multifamily mortgages.NLIHC explained that a growing number of multifamily buildings are facing foreclosure, the combined result of inflated mortgage costs and financially strapped renter households, the organization says.
“The extension of PTFA is a critical step in making sure that low-income families who are at risk of ending up on the streets through no fault of their own are able to keep their homes,” said NLIHC President Sheila Crowley. “Further, addressing the growing multifamily foreclosure rate shows a keen understanding that it is not just homeowners who are losing their homes to foreclosure.”