Title

Interpreting the Protecting Tenants of Foreclosure Act of 2009

Document Type

Working Paper

Publication Date

7-16-2016

SSRN Discipline

Economics Research Network; Legal Scholarship Network; FEN Subject Matter eJournals; Law & Society eJournals; Law & Society: Private Law eJournals; LSN Subject Matter eJournals; Financial Economics Network; Management Research Network

Abstract

In the summer of 2007 mortgage foreclosure rates were increasing in nearly all metropolitan areas By the end of 2008 the foreclosure crisis had spread to suburban areas as well Foreclosures in the United States are at an all time high and the number of foreclosed properties will likely increase as the recessions impact continuesWhile foreclosure negatively impacts individual owners and surrounding neighbors it often also results in the involuntary displacement of tenants The foreclosure crisis impacts a great number of tenants in part because of the "substantial rise in investorowned borrowing after 2002" In 2007 over 4800 foreclosures in Chicago were filed on twotosix unit buildings which are typically occupied by tenants In comparison there were approximately 7300 filings on oneunit properties which are often owneroccupied Moreover foreclosures on two to sixunit buildings represent many more than just 4800 householdsIn fact "renters displaced by foreclosures likely exceeded owners in 2007 in Chicago" Similarly in New York City an increase in foreclosure filings in 2008 affecting multifamily dwellings with five or more units impacted 16000 renter households The numbers increased in the first quarter of 2009 as 4500 rental households in multifamily dwellings with five or more units were affected by foreclosure filings While it is difficult to say with certainty how many rental households the foreclosure crisis has affected estimates indicate "nearly twenty percent of foreclosures involve" one to fourunit tenantoccupied propertiesOne potential consequence of this tenant displacement is homelessness Due to "little notice and scant savings" lowincome tenants are susceptible to becoming homeless Displaced tenants are also at risk of homelessness due to the fact that tenants are generally younger and have lower incomes than homeowners Lowincome households in turn have the greatest housing cost burdens These cost burdens coupled with a lack of affordable housing increase the risk of homelessness for displaced tenants18 As stated by the White House Press Secretary "one of the often overlooked problems of the foreclosure crisis has been the eviction of renters in good standing through no fault of their own from properties in foreclosure"In response to these "often overlooked problems" on May 20 2009 Congress passed the Protecting Tenants at Foreclosure Act of 200920 PTFA as Title VII of the Helping Families Save their Homes Act of 2009 PTFA requires existing leases to be honored when a property is foreclosed In the event that the tenant does not have a lease or the lease is terminable at will the tenant is entitled to 90 days notice to vacate This article will examine PTFA and its effect on state law in various jurisdictions Part II analyzes three aspects of PTFA 1 what PTFA accomplishes 2 vagueness within PTFA and 3 issues that PTFA does not address The second part of the article will consider how PTFA impacts state law in six jurisdictions Arizona Georgia Illinois Ohio Virginia and Washington DC

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