Those who rent foreclosed property in US at risk of losing everything
More and more tenants in the US are returning home to find their property locked and their possessions in bags outside as landlords default on their mortgages.
Renters of foreclosed properties are now amongst the most at risk of homelessness but their plight is virtually unknown, according to a new report.
It is published in the same week that charities in the UK warned of a similar situation with tenants becoming the new victims of the global property crisis.
The US report, Without Just Cause, published by the National Low Income Housing Association and the National Law Center on Homelessness & Poverty, shows that 40% of families facing eviction due to foreclosures are renting the property from landlords who have defaulted.
They have few rights or protection despite paying their rent on time. The law also varies from state to state. In some states, however, sheriffs are taking steps to protect tenants. Sheriff Tom Dart of Cook County, Illinois, has refused to evict renters in these cases. He suspended all mortgage foreclosure evictions in October, leading to new safeguards added to the eviction process, protecting both tenants of a building and taxpayers.
Normally the first time renters learn their building is in foreclosure is when the deputies arrive to evict them. Sheriff Dart's new protections require banks to provide sworn notice that all tenants have been notified before asking the sheriff to conduct a foreclosure eviction.
He admits he is at risk of violating court orders to evict and could be found in contempt but he says he also is responsible for making sure justice is being done.
The report found only 17 states require any type of notice to tenants about foreclosure; only 14 states and the District of Columbia require a judicial process for renters and foreclosures; in Florida, Iowa, Wisconsin, New York and Ohio tenants can remain in properties if they are not named in foreclosure proceedings.
Only New Jersey and the District of Columbia explicitly preserve tenants' lease rights after foreclosure.
'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, National Low Income Housing Coalition research director. 'Renter protections are important to stopping the cycle of decline.'
The coalition has called on Congress and the Obama administration to provide improve legal protection for tenants subject to foreclosure, in particular to provide at least 90 days notice before eviction and a requirement that existing leases and contracts be honored by new owners.