There's an article in today's New York Times that's anxiety-provoking for those of us who rent a house or condo. It's entitled "As Owners Feel Mortgage Pain, So Do Renters" and it discusses how the current mortgage foreclosure crisis is hurting renters in many areas. Nationwide, 1 in 8 homes foreclosed upon are renter-occupied, and here in California, the number is nearly 1 in 4. Banks typically evict the tenants upon foreclosure so that they can quickly sell the house at auction. California state law provides a 30-day notice to tenants, but in other places it can be as short as 72 hours! :-0
Can you imagine what these poor families must be going through? Here they are, paying their rent in a timely fashion, completely unaware that their landlord/lady has not been paying his/her mortgage on the place. Then boom, they get hit with a notice to leave in a mere 3 days.
The House of Representatives on Thursday passed a bill that would require landlords to provide their tenants a 90 day notice prior to foreclosures. Then, the new owners (typically the bank) would have to continue existing leases for 6 months. Tenants without leases would have 90 days to leave. The Senate is considering a similar bill introduced by Sen. Chris Dodd (D-CT). The banking industry opposes these bills, and the White House has released a statement critical of them.
I'm unfamiliar with all the details of these bills so I can't say whether or not I'm in favor of them as currently written. But I definitely feel that tenants deserve greater protection than current laws provide them!
The tenants are innocent victims of foreclosure since they played no role in the mortgages in question. The banks may have been stupid in approving loans that never should've been made and the landlords may have been stupid in obtaining mortgages they couldn't afford. The tenants on the other hand did nothing wrong. Our legal system should give them a greater amount of time before they get kicked out onto the street as the result of a mistake that other parties made :-(