22
Jun 2018
Protecting Tenants at Foreclosure Act: The Sequel
By admin

There have been seven Transformers, four Avengers, and nine Star Wars films. Arrested Development came back after five years off the air. Michael Jordan retired twice, and made two comebacks. Americans love sequels, reboots, and franchises — and so too does Congress, at least when it’s the Protecting Tenants at Foreclosure Act.

The Protecting Tenants at Foreclosure Act I, II & III

The Protecting Tenants at Foreclosure Act of 2009 (“PFTA”), which limits post-foreclosure eviction of tenants in certain residential properties, was originally enacted on May 20, 2009 and set to expire December 31, 2012.

Then came Dodd-Frank, which extended PFTA to the end of 2014, at which point it really did expire — or did it?

On May 24, 2018 Congress enacted the Economic Growth, Regulatory Relief, and Consumer Protection Act, which amended portions of Dodd-Frank and restored and revived PTFA, effective June 23, 2018.

This won’t be a huge change. Most major secondary market players maintained tenant protection policies on the books after PTFA expired in 2014. A prominent example is Fannie Mae’s Tenant-in-Place program.

Protecting Tenants at Foreclosure: Specifics & When it Applies

PTFA requires the purchaser (or foreclosing lender) to:

  • Give the tenant a 90-day notice to vacate before eviction; and
  • Honor the terms of a bona fide lease or tenancy on the property, unless the purchaser intends to occupy the property as a primary residence, in which case the lease can be terminated.

PTFA applies to tenants in any foreclosure of a “federally-related mortgage loan” (as defined by section 3 of the Real Estate Settlement Procedures Act of 1974 [12 USC 2602]), or on any dwelling or residential real property.

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