The Foreclosure Crisis and Its Impact on Tenants

There are estimates that nationwide as many as 40% of the families that face eviction due to foreclosure are renters. Depending upon the local market, this percentage may vary. The consequences for tenants residing in properties that have been foreclosed upon are often dramatic, and may include lease termination, eviction without proper notice or a reason other than the unit has been foreclosed upon, the loss of the tenant’s security deposit, deterioration of property conditions and utility shutoffs. Tenants also face costs of relocation, finding a new home, possible loss of a Section 8 voucher or other rental assistance, an eviction complaint which may affect their credit or the ability to lease another unit, and possible disruption of education, employment, medical treatment and social support networks.

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In a case of first impression, the appellate court held that the Protecting Tenants at Foreclosure Act requires post-foreclosure owners to serve a tenant with an unambiguous 90-day written notice before it may move forward with an eviction action.

A post-foreclosure owner may not require tenants to prove bona fide tenancy within five days to avoid its obligation to provide 90-day notice under the PTFA. If the owner has not provided the required 90-day notice, the burden is then on the owner to demonstrate that a property resident is not a bona fide tenant.

In this case, the bankruptcy court denied the bank’s motion for relief from the automatic stay because the tenant’s lease remained valid under the Protecting Tenants at Foreclosure Act as amended by the Dodd-Frank Act.

The decision of a California Superior Court judge who allowed a tenant to be evicted after only 30 days notice after foreclosure on the basis that the PTFA only applied to federally related mortgages was reversed on appeal.

In this tentative ruling, an eviction based on a 3/30/60/90 day was dismissed for failing to give proper notice. The court ruled that the notice is equivocal/ambiguous and thus was not effective to terminate the tenancy.

In this tentative ruling, the court dismissed the eviction based on a 3/60/90 day notice because the notice required any tenants to provide proof of tenancy within three days. The court held the notice to be equivocal because the notice period would vary depending on what steps an occupant takes in response to the notice.

In this case, the court held that a tenant occupying an illegal unit may still be a bona fide tenant under the PTFA.

In this decision, the court found that Fannie Mae must serve bona fide tenants a 90-day notice under the PTFA, even if the eviction is based on non-payment of rent (which required only a 14-day notice under state law).

In this case, the court granted the Delta motion and found that the bank must serve bona fide tenants a 90-day notice under the PTFA, even if the eviction is based on non-payment of rent (which required only a 3-day notice under state law).

Unless proven otherwise, an existing tenant is presumed to be a bona fide tenant protected under the PTFA.


This pleadings bank includes materials to assist advocates defend tenants in post-foreclosure evictions. There are also affirmative complaints seeking compensation for damages that result from post-foreclosure evictions and lockouts.

Statutes and Regulations

Text of the Protecting Tenants at Foreclosure Act of 2009 as clarified and extended by the Dodd-Frank Wall Street Reform and Consumer Protection Act. Pub. L. No. 111-22, div. A, tit. VII, §§ 701-704, 123 Stat. 1632, 1660-62 (enacted May 20, 2009), as amended by Pub. L. No. 111-203, tit. XIV, § 1484 (July 21, 2010)

• Department of Housing and Urban Development (HUD) Notice of Responsibilities Placed on Immediate Successors in Interest Pursuant to Foreclosure of Residential Property (June 24, 2009) and Guidance on Notification Responsibilities Under the Act With Respect to Occupied Conveyance (Oct. 28, 2010)
• Federal Reserve System Consumer Affairs Letter (July 30, 2009)
• Office of the Comptroller of the Currency (OCC) Bulletins 2009-28 (Aug. 2009), 2010-2 (Jan. 2010), 2011-15 (May 2011), and 2011-49 (Dec. 2011).
• National Credit Union Administration (NCUA) Regulatory Alert (Aug. 2009)
• Office of Thrift Supervision (OTS) Memorandum (Sept. 2, 2009)
• FDIC Financial Institution Letter (Sept. 28, 2009)


NLIHC has a web page dedicated to Renters in Foreclosure, with links to articles and research related to tenants and foreclosure.

Among their other resources, Tenants Together offers an annual report on California Renters in the Foreclosure Crisis and a hotline for California tenants in foreclosure situations.

REO Rental Policies

Fannie Mae’s national REO rental policy
Freddie Mac’s rental policy initiative
Deutsche Bank Memorandum on Laws, Rules and Regulations in Connection with Foreclosures on Securitized Assets (August 30, 2007)
Tenants Together’s compilation of banks’ policies as post-foreclosure landlords (Nov. 2010)

National Law Center on Homelessness and Poverty published Staying Home: The Rights of Renters Living in Foreclosed Properties (June 2010), a report explaining the Protecting Tenants at Foreclosure Act and summarizing state laws that protect tenants in foreclosed properties.