Governor Proposes Foreclosure Moratorium, but Proposal Ignores Tenants in Foreclosed Properties

Friday, November 7, 2008
Dean

Yesterday, Governor Arnold Schwarzenegger announced a proposal for a 90-day "stay" of foreclosure proceedings to help struggling homeowners. According to the Governor's press release, "To reduce foreclosures and encourage loan modifications, the Governor proposes a 90-day stay of the foreclosure processes for each owner-occupied home subject to a first mortgage on which a Notice of Default has been filed." The Governor’s proposal would need to be approved by the legislature to become law.

The proposal only reaches owner-occupied properties, providing no relief for tenant-occupied properties in foreclosure.

An estimated 25% of foreclosed single family homes in California are tenant-occupied. Innocent tenants who happen to rent from defaulting homeowners are experiencing great hardship across California. These tenants are generally forced to move after the foreclosure, and many tenants report harassment and utility shut-offs once the banks take over the property.

Just weeks ago, the Governor vetoed two bills (AB 1333 and AB 2586) that would have provided basic protections to tenants after foreclosures. These modest bills would have made sure that banks followed the same rules as other landlords once they took over foreclosed properties that were tenant-occupied. The governor's vetoes were a slap in the face to renters, as was his subsequent line-item veto of the entire renters’ rebate program for low-income senior and disabled renters.

Tenants Together is calling for greater protections for tenants in foreclosed properties. The proposed moratorium on foreclosures should cover all occupied properties, whether those properties are occupied by tenants or owners.

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