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PTFA, originally enacted in May 2009, allows renters whose landlords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
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.
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