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Mar 02, 2009

NLIHC and NLCHP report: Renters in foreclosed properties may face homelessness MortgagePress.comNational Low Income Housing Coalition, National Law Center on Homelessness and Poverty, renters, foreclosures, Danilo Pelletiere Foreclosures are driving an increase in homelessness across the country, according to a new report by the National Low Income Housing Coalition (NLIHC) and the National Law Center on Homelessness & Poverty (NLCHP), and with pro bono assistance from the law firm of WilmerHale. Renters of foreclosed properties are among those most at risk of homelessness, but their plight has received little attention. Without Just Cause outlines the rights, and lack thereof, for renters in foreclosure in all 50 states and the District of Columbia. About 40 percent of families facing eviction due to foreclosure are renters whose landlords have defaulted on their mortgages, and these renters have little protection. If a landlord is foreclosed upon, tenants who have diligently paid their rent on time may face eviction without notice, coming home to find locks changed and their belongings on the street. Some local sheriffs, such as Sheriff Tom Dart of Cook County, Ill., made headlines for refusing to evict renters in these cases. The status of renters in foreclosure cases is a matter of state law, and laws are complex and vary among the 50 states and the District of Columbia. In practice, there are often even fewer protections: Even if they have rights, many renters are often unaware of them, and few have easy access to lawyers, who may also be unaware of tenants' rights. Major findings of this report show: • Only 33 percent of states (17 states) require any type of notice to tenants. • Only 29 percent of states (14 and DC) require a judicial process for foreclosure. • In several states (e.g. FL, IO, WI, NY, OH) tenants may remain only if they are not named in the foreclosure proceeding. • Only two percent of states (NJ and DC) explicitly preserve tenants' rights in the lease after foreclosure. Only 23 states provide some exceptions that may preserve tenants rights. For example: • In Connecticut, tenants who are elderly, disabled, or receive federal housing subsidies (Section 8) are protected and their tenancies preserved. • In Illinois, if tenants are not named in the foreclosure proceedings, they can maintain their lease, subject to the filing of a "supplemental petition" by the lender. • In nine states, the lease may be protected if it predated the mortgage, depending on mortgage terms. "This lack of protection for law abiding renters can result in families losing their homes, children changing schools, and communities being destabilized unnecessarily," said Danilo Pelletiere, NLIHC research director. "Renter protections are important to stopping the cycle of decline." In response, NLIHC has called on Congress and the Administration to provide: • $10 billion for the National Housing Trust Fund over 2009-2010 to rehabilitate or build 100,000 rental homes for the lowest income households using green standards. • $2 billion in Emergency Shelter Grants, for homelessness prevention and housing assistance to prevent low income renter households from becoming homeless, and to rapidly re-house those that do lose their homes; 400,000 households would be assisted. • 400,000 new housing vouchers over 2009-2010, which would assist another 4000,000 low income families afford modest rental housing in what is likely to be a tightening market. • Legal protections for tenants in properties subject to foreclosure, including the requirement that existing leases and contracts be honored by new owners and in the absence of a lease, renters be provided with at least 90 days notice before eviction. "Roughly 40 percent of the families facing eviction are renters and in some cases they receive as little as one week between foreclosure and eviction. These families have limited time and limited resources to find new housing, and without action, an increase in homelessness is imminent," said NLIHC President Sheila Crowley. "Congress and the Administration must take the needs of those suffering the most in this recession into consideration." The report Without Just Cause can be found online by clicking here. For more information, visit www.nlihc.org.
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