A new report analyzes records of foreclosed residential properties in California filed in 2009 and estimates that at least 37% of homes in foreclosure are rentals, with more than 200,000 tenants affected by these foreclosures. The report, a follow-up from one issued last year, shows that the foreclosure rate for apartment buildings of more than five units increased by 70% between 2008 and 2009.
The study calls the displacement of tenants from foreclosure “first and foremost a problem caused by banks,” noting that 85% of all foreclosed properties, including both owner-occupied and rental homes, have been acquired by financial institutions. The authors estimate that by evicting tenants, banks lost more than $776 million in rental income in 2009 alone.
The report also discusses recent developments in tenant protections at the federal, state and local levels, including the Protecting Tenants at Foreclosure Act (PTFA). The authors find that even with the adoption of many of these laws, tenants continued to be harassed and evicted when their property is facing foreclosure. Fortunately, the authors note, federal and state regulators have begun responding to tenant complaints. Examiners with the Office of the Comptroller of the Currency are evaluating banks’ compliance with PTFA as part of its certification requirements.
Finally, the report presents some key recommendations to protect and expand the rights of tenants in foreclosure situations. The authors urge Congress to make PTFA permanent, localities to pass “just cause for eviction” laws to prevent the eviction of tenants after foreclosure, and enforcement agencies to step up enforcement efforts to assure compliance with tenant-protection laws and hold banks and their agents accountable for violating tenant rights.
2010 Report: California Tenants in the Foreclosure Crisis was published by Tenants Together, California’s statewide organization for renter rights. To read the study, visit: http:// tenantstogether.org/downloads/2010%20Report-%20 California%20Renters%20in%20the%20Foreclosure%20 Crisis.pdf