On December 14, the Office of the Comptroller of the Currency (OCC) released guidance on how financial institutions should address potential issues with foreclosed residential properties.
The guidance reminds institutions of the rights afforded to tenants under the Protecting Tenants at Foreclosure Act (PTFA). The real estate owned (REO) housing stock of many financial institutions has increased at a rate that outpaces the demand for homes. As such, many financial institutions or their agents now serve as landlords of renter-occupied REO properties.
“When a bank takes title to a house after foreclosure, it must honor any existing rental agreement with a bona fide tenant and must provide 90 days’ notice to the tenant prior to eviction whether or not the tenant has a rental agreement,” says the OCC in the guidance. “State laws may impose additional requirements that are not preempted by the act. Additional potential requirements with respect to rental properties include: reviewing the lease to determine if the property can be shown to prospective purchases; and returning any security deposit upon termination of the rental agreement.”
Representative Keith Ellison (D-MN) introduced legislation, H.R. 3619, that would make the PTFA a permanent law (see Memo, 12/9). On December 14, NLIHC and the National Law Center on Homelessness and Poverty co-hosted a webinar for congressional district office staff on the rights afforded to tenants in foreclosure. Staff from the office of Representative Ellison described the provisions of H.R. 3619 and asked that other Members of Congress cosponsor the legislation.
Readers can access the OCC guidance at http://www.occ.gov/news-issuances/bulletins/2011/bulletin-2011-49.html
Access materials from the PTFA webinar at http://nlihc.org/issues/foreclosure