Dodd-Frank Reform Bill Extends Tenant Act through 2014
The financial reform bill passed by Congress will extend the Protecting Tenants at Foreclosure Act (PTFA) through the end of 2014. President Obama is expected to sign the legislation on Wednesday. PTFA, originally enacted in May 2009, allows renters whose landlords have lost their properties to foreclosure the right to stay in the home for 90 days after the foreclosure or through the term of their lease. Without the new extension in the financial reform bill, the law would have expired at the end of 2012. The new law also clarifies the date of a notice of foreclosure as the date of a completed title transfer: “The date of a notice of foreclosure shall be deemed to be the date on which complete title to a property is transferred to a successor entity or person as a result of an order of a court or pursuant to provisions in a mortgage, deed of trust, or security deed.’’ When the PTFA was enacted last year, it completely changed the way REO evictions are conducted, said Robert Jackson, president and managing attorney at the Irvine, Calif.-based Jackson and Associates law firm, while speaking last month at REO Expo 2010. Jackson and Freddie Mac operations manager Peter Kuclo will conduct an REO Insider webinar on the PTFA in mid August with practical and in-depth information on the act for real estate brokers and agents, including how brokers can protect themselves from legal risks related to the act. Watch the REOi website for more information. Under the Dodd-Frank bill, any lease or tenancy created prior to the change of title as a result of foreclosure is protected by PTFA, according to The National Low Income Housing Coalition (NLIHC), a tenant-advocacy group that supports the changes. Whether the PTFA has caused tenants to sign long-term leases immediately before a foreclosure — tying up disposition of a property — is a subject of concern for the default servicing industry. NLIHC said it championed PTFA after its analysis of foreclosure data showed that as many as 40% of the families affected by foreclosure are renters. The act also calls on the Secretary of Housing and Urban Development (HUD) to establish a program providing grants for foreclosure legal assistance to low- and moderate- income homeowners and tenants related to home ownership preservation, foreclosure prevention and tenancy-related home foreclosures. Any funds provided under the provision cannot be used for class-action litigation, the bill states. The provisions take effect on the date the bill is enacted. Write to Kerry Curry.