National Low Income Housing Coalition statement on the Obama administration’s Homeowner Affordability and Stability PlanMortgagePress.comNational Low Income Housing Coalition, Barack Obama, Homeowner Affordability and Stability Plan, foreclosure, Sheila Crowley
The Housing Affordability and Stability Plan announced by
President Barack Obama offers considerable promise to homeowners
who are at risk of losing their homes due to foreclosure. The
National Low Income Housing Coalition is hopeful that the
Presidents plan will reduce the number of home-owning families who
are evicted from their homes because they no longer can afford
their mortgage payments.
However, the plan does not appear to provide relief for renters
who are losing their homes because their landlords have been
foreclosed upon. Approximately 40 percent of the households who
face eviction because of foreclosure are renters. In most states,
renters' tenancy is terminated automatically at foreclosure of a
property. In many states, there is no requirement that tenants even
be notified of foreclosure. However, in New Jersey and the District
of Columbia, tenants are protected from eviction due to
foreclosure.
The National Low Income Housing Coalition and other advocates
for low income renters have urged the establishment of federal
protections for renters that will require the entity that takes
possession of a renter-occupied property at foreclosure to honor
the existing lease or provide a minimum of 90 days' notice for the
tenant to vacate the property.
"Renters are the least blameworthy of all the victims of the
foreclosure crisis," said NLIHC President Sheila Crowley. "It is
unconscionable that someone who has been a lease-abiding tenant,
paying the rent on time, be evicted with little or no notice
because the landlord has defaulted on the mortgage. It also does
not make sense to get rid of a tenant who provides an income stream
for the new owner and prevents a property from sitting vacant. An
occupied house with a good tenant is far preferable to an
unoccupied house for both the new owner and the surrounding
neighborhood."
Protections for some renters have been included in recent
federal legislation. For example, the economic stimulus bill just
signed by President Obama requires that tenants in foreclosed
properties purchased using new Neighborhood Stabilization Program
funds receive a minimum of 90 days notice before eviction and be
allowed to remain for the term of their leases.
Under the October 2008 legislation that created the Troubled
Asset Relief Program (TARP), the Treasury Department is required to
coordinate with federal entities, including FDIC, the Federal
Reserve, the Federal Housing Finance Agency, and HUD, that are
holding troubled assets to permit "bona fide tenants who are
current on their rent to remain in their homes under the terms of
the lease." In addition, in the case of residential rental
properties, Treasury is required to maintain federal, state, and
local rental subsidies and protections, and ensure that loan
modifications result in financially viable projects. No regulations
implementing these provisions have been issued. However, in
response to a suit filed by a tenant in a property that had been
foreclosed upon by Fannie Mae, Fannie Mae and now Freddie Mac have
announced policies that will allow renters to stay after
foreclosure.
"We urge Treasury Secretary Geithner to use his authority to
require all institutions that receive TARP funds at a minimum to
honor the leases of existing tenants in properties they acquire
through foreclosure," Crowley said. "A great deal of harm to
innocent families could be prevented if he acted now."
Advocates will continue to seek legislation to provide
additional federal protections to address all renters affected by
foreclosure.
For more information, visit www.nlihc.org.
