Question on Protecting Tenants Act (lease, tenant, rental, house)

[Lacerta]

So, regarding the Protecting Tenants at Foreclosure Act of 2009, I'm hoping someone knows an answer to this one. We have a tenant at a rental we manage who has lived there for about a year. The house was already in the foreclosure process when they moved in, and they were aware of it. I understand the Act got modified to include tenants such as these, rather than only ones who moved in before the notice of default was served. So I'm pretty sure they are covered under the act.

My question is:

The bank would therefore be required to give the tenants 90 days notice to vacate, since they are now month to month. But the foreclosure hasn't happened yet, and an asset manager has already shown up at the house and given them their notice. Can the bank start the 90 days before they own the house? I was under the assumption they had to actually OWN the house before they could give the tenants notice to vacate. The foreclosure has already been postponed about 8 or 9 times. Who is to say the bank will even own the house yet 90 days from now?

To me this sounds like an intimidation tactic, but I wanted to make sure I hadn't missed anything.

[McBain II]

The bank is in the wrong here. Here's the quote of the law:

immediate successor in interest in such property pursuant to the foreclosure shall assume
such interest subject to—

Here I quote from the Office of the Comptroller of Currency Handbook:

The tenant protection provisions apply in the case of any foreclosure on a “federally related mortgage loan” 2 or on any dwelling or residential real property. They provide that “any immediate successor in in terest” in such a foreclosed property, including a bank that takes title to a house upon foreclosure, will assume the interest subject to the rights of any bona fide tenant and will need to comply with certain notice requirements.

Under this law, the immediate successor in interest of a dwelling or residential real property must provide tenants with a notice to vacate at least 90 days before the effective date of such notice.

The date of a “notice of foreclosure” is defined as the date on which complete title to a property is transferred to a successor entity or a person as a result of a court order or pursuant to provisions in a mortgage, deed of trust, or security deed. 3

http://www.occ.gov/publications/publ...dbook/ptfa.pdf

If the bank has not actively taken possession of the home, they have no standing to issue this notice as far as I can see.

[Lacerta]

Thank you, that was my interpretation as well, just wasn't sure I was right.

[CptnRn]

It is just my opinion but it looks to me like they can. The language in the law talks about "the successor in interest" providing the 90 day notice. The way I read it, it sounds like they can issue that notice before the foreclosure is complete.

I'm sure the financial institutions doing the foreclosures have had their legal teams pouring over the act in detail and are not likely to do this unless it holds up.

http://www.fdic.gov/news/news/financ.../fil09056a.pdf

SEC. 702. EFFECT OF FORECLOSURE ON PREEXISTING TENANCY.
(a) IN GENERAL. —In the case of any foreclosure on a federally-
related mortgage loan or on any dwelling or residential real property
after the date of enactment of this title, 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

[McBain II]

Originally Posted by CptnRn

It is just my opinion but it looks to me like they can. The language in the law talks about "the successor in interest" providing the 90 day notice. The way I read it, it sounds like they can issue that notice before the foreclosure is complete.

For that succession to happen though they must actually have acted on it though, either through a short sale or court order. If the matter is still being litigated they have not received possession of the house and cannot take these actions.

I'm sure the financial institutions doing the foreclosures have had their legal teams pouring over the act in detail and are not likely to do this unless it holds up.

This is the same industry that just paid BILLIONS of dollars over the robo-signings of fraudulent affidavits that were submitted to courts in foreclosure proceedings. They collective level of integrity of that profession is not exactly high.

[Lacerta]

The foreclosure on this particular property has been going on for almost 4 years now. I have no confidence it will foreclose on any given date at this point. So what happens if they give a 90 days notice to the tenant now, and still haven't foreclosed in 90 days? That is the main reason it seems like they couldn't do this.

[parentologist]

It's not just that they have to give a 90 day notice. I think they actually have to pay them something to leave - if I recall correctly, it's a minimum of 2K - and give them 90 days notice after they've taken possession. If you're managing the property, is this tenant paying rent currently?

[Lacerta]

The tenant is paying rent, yes

There is no law that I know of that any bank HAS to buy any tenant out. They can TRY to buy the tenant out if they want them to move out sooner than the 90 days.

[breeinmo.]

I've said this before and it has nothing to do with the OP, but why are the "owners" who are not paying their house payments allowed to earn rent money? They cant even be bothered to go and collect their ill gotten gains themselves. Living in a house you're not paying for is one thing, but using that house as your own personal cash cow is stealing imo. Why is this practice allowed? Shoot, wish I could be a landlord on property I don't own. Why does it seem no one has a problem with this?

And imo, the bank should have the right to have the house empty when they take over. Don't they already own it anyway? I sure don't think the people who took out a loan, quit making payments and then rent it out are the owners. And I'm not sticking up for the crooked banks, but right is right.

[McBain II]

Originally Posted by breeinmo.

I've said this before and it has nothing to do with the OP, but why are the "owners" who are not paying their house payments allowed to earn rent money? They cant even be bothered to go and collect their ill gotten gains themselves. Living in a house you're not paying for is one thing, but using that house as your own personal cash cow is stealing imo. Why is this practice allowed? Shoot, wish I could be a landlord on property I don't own. Why does it seem no one has a problem with this?

As unethical as it is, there is really nothing that could be done short of new legislation to change it.

And imo, the bank should have the right to have the house empty when they take over. Don't they already own it anyway? I sure don't think the people who took out a loan, quit making payments and then rent it out are the owners. And I'm not sticking up for the crooked banks, but right is right.

And I think the tenants (who are generally innocent parties in this) have the right to have their contract even if ownership of the ownership changes hands. Fortunately for them, the law agrees with me.