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Home Foreclosure Law Expiration Encourages Tenant Evictions
Expired Federal Law to Protect Renters Leads to Evictions in Foreclosed Homes
Mortgage service companies are preparing for another public image disaster after a federal law designed to protect renters from foreclosures expired.
Evictions are rising on properties entering foreclosure after the Protecting Tenants at Foreclosure Act expired Dec. 31.
The law required that tenants in foreclosed properties be given 90 days notice before they could be evicted.
The law was passed in 2009. A bill introduced in Congress last week would extend the 90-day notice provision permanently.
However, a similar bill introduced last year to extend the Protecting Tenants at Foreclosure Act never won approval in the Republican-dominated Congress.
Wells Fargo, the nation’s largest mortgage service company, announced that it is no longer following the 90-day notice and other eviction guidelines in the law.
JPMorgan Chase, Citigroup and Nationstar are following the expired guidelines voluntarily. Bank of America officials announced they are reviewing their eviction-in-foreclosure procedures.
Mortgage service companies now are being forced to comply with different regulations in different states.
Only the District of Columbia and nine states have laws similar to the Protecting Tenants at Foreclosure Act. Seventeen states offer no protection to tenants when the property they rent is foreclosed, which means they could be evicted immediately after a foreclosure sale.
Between 30 percent to 40 percent of foreclosed properties consist of rental housing, according to the National Low Income Housing Coalition.
Although the Protecting Tenants at Foreclosure Act was popular with renters and their advocates, it is controversial with property investors who perceive it as hurting their earning potential.