On May 20, 2009, the U.S. Senate passed the Helping Families Save Their Homes Act of 2009, which gives renters living in foreclosed properties legal protection against immediate eviction. In the current foreclosure crisis, 40% of cases involve tenants, who had few legal rights before the new law. In this feature Jeremy Rosen of the National Policy and Advocacy Council on Homelessness (NPACH) explains the new protections for renters and shares his hopes that the law will help prevent homelessness.

Imagine you have signed a 12-month lease. You are two months into your lease. Then, your landlord falls behind on mortgage payments. The bank forecloses on the property, the lease is broken, and the bank becomes the new owner of your home.  Legally, the bank can require you to leave the property within as little as three days to one month.  As the tenant, you essentially lose all your rights.

Remarkably, tenants would have more rights in a straight eviction case.  In the case of a foreclosed property, usually the tenant has done nothing wrong but is still told to vacate the premises with little advance notice. “Throughout the entire foreclosure crisis, we have discovered that 40% of the time, when a foreclosure takes place, the actual property owner is not the person who is living in the property. There’s a tenant involved,” explains Jeremy Rosen, Executive Director of the National Policy and Advocacy Council on Homelessness.

Until now, there has been no legal protection for tenants living in foreclosed properties.

All over the country, these scenarios have led very quickly to homelessness.

Enter Senate Bill 896, known as the Helping Families Save Their Homes Act of 2009. Passed into law on May 20, 2009, S.896 creates a nationwide 90-day pre-eviction notice requirement for tenants in foreclosed properties. These provisions became active the day the bill was signed and affect every state in the nation.

Why is Senate Bill 896 so important?

“It guarantees protection for innocent tenants. We have altered the law in every state in the country to say that when there is a foreclosure, the tenant will be allowed to either remain for the remainder of their lease, or for a minimum of 90 days,” says Rosen.

There are other provisions in the new law. If the bank re-sells a property post-foreclosure to someone who intends to occupy the home, existing tenants will still receive 90 days notice. Under the new law, occupants who have Section 8 vouchers will be allowed to stay for the full duration of the original lease. Section 8 Rental Voucher Program is a federally funded program that increases affordable housing choices for very low-income households by allowing families to choose privately owned rental housing.

“It is tremendously important for homeless service providers and others to know about this law,” says Rosen. He suspects that many tenants will require the assistance of Legal Aid. “Tenants often have a variety of rights that landlords do not always honor and when that occurs, tenants can argue on their own behalf, or secure the assistance of Legal Aid.”

He hopes that people will learn about the new law, and that it will help prevent new cases of homelessness. Emerging data point to an increase of foreclosure-related homelessness. In December 2008, the U.S. Conference of Mayors announced that 12 major cities reported an increase in homelessness as a result of foreclosure.  In March 2008 CBS News reported “38 percent of foreclosures now involve rental properties,” affecting “at least 168,000 households nationwide.” In some areas as many as half the foreclosed units are occupied by tenants.

Rosen adds that S.896 will also work well with the Homelessness Prevention and Rapid Re-Housing Program (HPRP) that was passed in February 2009, providing $1.5 billion to communities for homelessness prevention. “If somebody is about to lose their housing, the community could hand them a check for $2,500, which would go directly to the vendor to pay their moving expenses, and their first and last month’s rent on a new place, ensuring an easier transition.”

Eligibility for this program includes both people at risk for homelessness and people who are already homeless. The entity that distributes the funds from HPRP will depend on the community.

So, what does it take to pass legislation like this?

“It took a lot of dogged advocacy, some really good work and a few key champions on Capitol Hill,” says Jeremy, noting that three other key advocates for this landmark bill include Barney Frank (D-MA) who chairs the Financial Services Committee, Keith Ellison (D-MN), and Senator John Kerry (D-MA).

For additional information on S. 896 and renters in foreclosure, click here to visit the National Low Income Housing Coalition