June 3, 2009 in City

Renters in foreclosed homes feel the pinch

By The Spokesman-Review
 

Learn more

For an explanation of the new federal law, form letters renters may use to assert their rights and other tools, visit the National Low Income Housing Coalition Web site at www.nlihc.org.

Legal protections for tenants renting homes in foreclosure

Federal: A law signed by President Obama late last month requires that leases be honored in most foreclosure cases and that renters without leases be given at least 90 days to move.

State: A new law in Washington requires the new owner of a foreclosed home to give tenants 60 days notice before they must vacate, during which no rent would be paid, or allows for the negotiation of a new rental agreement. That law is set to take effect July 26.

Stefanie Tietge has been faithfully paying the rent.

Her landlord can’t say the same thing about the mortgage, though, so the Spokane Valley home where Tietge, her fiance and their 19-week-old twins live has fallen into foreclosure. Now the family is looking for a new place to live before a posted deadline of June 26.

“Basically, we have three weeks before we have to move,” said Tietge, a 24-year-old who works for Spokane Mental Health. “I’m looking on Craigslist like, a gazillion times a day, and in the paper in the classified ads.”

As foreclosures have risen around the country and regionally, a lot of renters have found themselves pinched – forced to move immediately, in some cases, with or without a lease. No one keeps exact figures on renters displaced by foreclosure, but the Mortgage Bankers Association estimates that about 20 percent of foreclosures involve owners who do not live in the home.

“There are a lot of tenants getting caught in the crosshairs of this foreclosure problem,” said Bruce Neas, an attorney with the Olympia office of Columbia Legal Services, which provides legal services to low-income people.

A law signed by President Barack Obama late last month provides new protections for renters, requiring that leases be honored in most foreclosure cases and that renters without leases be given at least 90 days to move.

Meanwhile, a new state law requires that new owners of foreclosed homes give tenants 60 days notice before they must vacate, during which no rent would be paid; or allows for the negotiation of a new rental agreement. That law is set to take effect July 26, and it’s not yet clear how it will mesh with the federal law, Neas said.

“It’s really complicated,” he said. “We haven’t really decided how we’ll be advising people on this.”

Tenant advocates say that in any case, the new provisions offer a better deal for renters in a foreclosure situation, who have often found themselves on the street with little or no notice.

The new federal law, which took effect May 20, would apparently cover Tietge’s situation. She signed a one-year lease last August – at which time her landlord had already postponed one foreclosure action she didn’t know about. She was unaware of the law earlier this week, and she’s exploring whether it will give her some added time.

She had been seeing foreclosure notices posted at her Spokane Valley home for months, but her landlord, who lives in Sacramento, Calif., repeatedly told her not to worry, she said. But the foreclosure proceedings on the property were finalized May 22, with the home going back to the bank.

“If they would have told us, we wouldn’t have rented it,” she said. “They kept saying they were taking care of it and they weren’t.”

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