Law Gives Military Renters More Protection Against Foreclosures

American Forces Press Service ^ | Sgt. 1st Class Michael J. Carden, USA

[SandRat]

WASHINGTON, June 11, 2009 – President Barack Obama’s latest efforts to look after home renters gives military members additional protection if the homes they rent are foreclosed, a Defense Department official said today.

The president’s Protecting Tenants at Foreclosure Act of 2009 was signed into law on May 20. The legislation ensures that renters aren’t forced out of their homes if foreclosure occurs and a new landlord takes over.

Renters in every state now have more time to find new homes. The new law greatly benefits the military, as the vast majority of active duty servicemembers rent homes throughout the United States, said Army Col. Shawn Shumake, director of legal policy in the Pentagon’s personnel and readiness office.

While about 65 percent of the U.S. population own their homes, only about 25 percent of servicemembers are homeowners, so, foreclosure of rented homes potentially can affect most of the military, Shumake said.

“We’ve got a lot of folks out there that find that they are in really difficult positions, because their landlords are foreclosed on,” he explained in a Pentagon Channel interview. “This law provides them a measure of security and protection they didn’t previously have.”

The legislation gives renters the right to stay in their homes throughout the duration of their lease, he said, unless the new owner is moving into the home or if the renter is renting under a month-to-month lease. Still, the new law gives renters at least 90 days before they can be evicted, he noted.

“This act is a protection that’s really powerful and important, and a great help to our servicemembers,” the colonel said. “This provides renters some particular [and] some important rights so they’re not kicked out on the street with no notice.”

Before the law went into effect, only individual state protection was available, or none at all, Shumake said. There was no consistency from state to state in the rights people had to fight immediate eviction after foreclosure.

The inconsistency may have been difficult on military members, many of whom are transferred from one state to another every two to three years. The federal law now provides a baseline of protection for all renters, no matter where they live in the United States, he said.

“There was no uniformity or anything you could count on,” Shumake said. “[The law] now makes things the same across the country, and it at least gives you some basics that you know are there. At the very least, you know you’re going to get that 90 days of protection.”

The act is one of several laws that ensure military members are taken care of as they move from state to state to new duty stations, Shumake said. He noted the Joint Federal Travel Regulation, which defines financial benefits awarded to servicemembers upon changing duty stations.

The regulation was amended in July because of the rising foreclosure rates to allow the federal government to financially support local moves by military members. So, if one of the two exceptions occurs and servicemembers are forced to move from their home, the government may pay for the move, he said.

The regulation and Obama’s new legislation go “hand in glove,” Shumake said.

Military members faced with such uncertainty are in the best possible position with the two protections, he said.

For more information, servicemembers should contact their local legal office.

Related Sites:
Office of the Undersecretary of Defense for Personnel and Readiness

[Tublecane]

“Before the law went into effect, only individual state protection was available, or none at all, Shumake said. There was no consistency from state to state in the rights people had to fight immediate eviction after foreclosure.”

Well, yeah, what the hell does the federal government have to do with renting a house?

[PAR35]

A BILL

To protect the interests of bona fide tenants in the case of any foreclosure on any dwelling or residential real property, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `Protecting Tenants at Foreclosure Act of 2009’.

SEC. 2. EFFECT OF FORECLOSURE ON EXISTING TENANCY.

(a) In General- In the case of any foreclosure on any dwelling or residential real property, any immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to—

(1) the provision, by such successor in interest, of a notice to vacate to any bona fide tenant at least 90 days before the effective date of such notice; and

(2) the rights of any bona fide tenant, as of the date of such notice of foreclosure—

(A) under any bona fide lease entered into before the notice of foreclosure to occupy the premises until the end of the remaining term of the lease, except that a successor in interest may terminate a lease effective on the date of sale of the unit to a purchaser who will occupy the unit as a primary residence, subject to the receipt by the tenant of the 90 day notice under paragraph (1); or

(B) without a lease or with a lease terminable at will under State law, subject to the receipt by the tenant of the 90 day notice under subsection (1),

except that nothing under this section shall affect the requirements for termination of any Federal- or State-subsidized tenancy or of any State or local law that provides longer time periods or other additional protections for tenants.

(b) Bona Fide Lease or Tenancy- For purposes of this section, a lease or tenancy shall be considered bona fide only if—

(1) the mortgagor under the contract is not the tenant;

(2) the lease or tenancy was the result of an arms-length transaction; and

(3) the lease or tenancy requires the receipt of rent that is not substantially less than fair market rent for the property.

SEC. 3. EFFECT OF FORECLOSURE ON SECTION 8 TENANCIES.

Paragraph (7) of section 8(o) of the United States Housing Act of 1937 (42 U.S.C. 1437f(o)(7)) is amended—

(1) in subparagraph (C), by inserting before the semicolon at the end the following: `, and in the case of an owner who is an immediate successor in interest pursuant to foreclosure—

`(i) during the initial term of the tenant’s lease having the property vacant prior to sale shall not constitute good cause; and

`(ii) in subsequent lease terms, having the property vacant prior to sale may constitute good cause if the property is unmarketable while occupied, or if such owner will occupy the unit as a primary residence’;

(2) in subparagraph (E), by striking `and’ at the end;

(3) by redesignating subparagraph (F) as subparagraph (G); and

(4) by inserting after subparagraph (E) the following:

`(F) shall provide that in the case of any foreclosure on any residential real property in which a recipient of assistance under this subsection resides, the immediate successor in interest in such property pursuant to the foreclosure shall assume such interest subject to the lease between the prior owner and the tenant and to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit; if a public housing agency is unable to make payments under the contract to the immediate successor in interest after foreclosure, due to action or inaction by the successor in interest, including the rejection of payments or the failure of the successor to maintain the unit in compliance with paragraph (8) or an inability to identify the successor, the agency may use funds that would have been used to pay the rental amount on behalf of the family—

`(i) to pay for utilities that are the responsibility of the owner under the lease or applicable law, after taking reasonable steps to notify the owner that it intends to make payments to a utility provider in lieu of payments to the owner, except prior notification shall not be required in any case in which the unit will be or has been rendered uninhabitable due to the termination or threat of termination of service, in which case the public housing agency shall notify the owner within a reasonable time after making such payment; or

`(ii) for the family’s reasonable moving costs, including security deposit costs;

except that this subparagraph and the provisions related to foreclosure in subparagraph (C) shall not affect any State or local law that provides longer time periods or other additional protections for tenants.’.