Foreclosure Crisis Continues to Hurt Renters
Posted under Resources on September 25, 2012
The plight of distressed homeowners has been central to the story of the foreclosure crisis. But as a new report shows, as the crisis continues, renters find themselves at great risk of losing their homes due to foreclosure as well.
Renters make up at least 40 percent of families affected by foreclosure, and the number of renters affected by foreclosure has tripled in just the last three years, according to a report released today by the National Low Income Housing Coalition. The report, Renters in Foreclosure: A Fresh Look at an Ongoing Problem, also shows that in the early years of the foreclosure crisis, high-poverty neighborhoods saw the most foreclosures, and foreclosure rates are still disproportionately high in African-American neighborhoods, particularly foreclosures of multifamily (rental) properties.
The National Low Income Housing Coalition analyzed foreclosure data from four New England states: Connecticut, Massachusetts, New Hampshire and Rhode Island. The data show that about 46 percent of homes at foreclosure auction or with real estate-owned status in this region were rental units. An estimated 148,818 renters were affected by foreclosure in these four states between January 2010 and March 2011. When these data were examined for the period of January 2007 through March 2008, the number of renters affected by foreclosure was less 44,000.
A review of reports from California, New York, Minnesota and Illinois suggests that foreclosure is impacting renters at a similar rate across the country. California advocates report that at least 38 percent of homes in foreclosure were rentals; New York City is seeing up to 56 percent, and in Minneapolis, rental properties are involved in 65 percent of foreclosures. In addition, analysis in Chicago showed many minority and low income communities saw more than 10 percent of their rental stock impacted by foreclosure.
Some important protections exist for renters in foreclosure. Made law in 2009, the federal Protecting Tenants at Foreclosure Act has been a valuable protection for renters at the time of foreclosure. The law requires the new owners of foreclosed properties to give tenants 90 days’ notice before requiring them to vacate, and tenants with a lease are allowed to stay until the end of that lease, among other provisions. Before the Protecting Tenants in Foreclosure Act, renters in most states had no protections, and in many states, renters who had no idea that their homes were in jeopardy were facing eviction with just a few days’ notice.
In its report, NLIHC finds that legal service providers and housing counselors view the law as extremely helpful in preventing eviction of renters due to foreclosure. But its effectiveness is limited because the Protecting Tenants at Foreclosure Act is self-executing, meaning that tenants must know the law and petition for its enforcement. Representative Keith Ellison (D-MN) introduced H.R. 3619, the Permanently Protecting Tenants at Foreclosure Act, to add an enforcement mechanism to the original legislation and make the act, which is set to expire in 2014, permanent.
“While renters continue to be about 40 percent of those whose homes are threatened by foreclosure, the number of households affected by foreclosure has grown significantly.” said Sheila Crowley, President and CEO of the National Low Income Housing Coalition. “It is imperative that existing federal protections for renters be strengthened and an enforcement mechanism be created, so that no renters lose their homes due to foreclosure.”
The report recommends that in addition to more protections for renters, more housing must be made affordable for lower income renters. NLIHC calls for funding the National Housing Trust Fund this year. The full report is available here