Threats facing renters in the foreclosure crisis

This article was originally covered by PRI’s The Takeaway. For more, listen to the audio above.

More people are trying to rent their homes today than there were before the financial crisis. There has been a 10 percent increase of landlords over the last five years, according to the Census Bureau. This has caused problems for renters, because many of these new landlords are facing foreclosures. Mike Vraa, managing attorney at Home Life — a statewide tenant advocacy organization for the state of Minnesota — told PRI’s The Takeaway, “In 2003, we took 16 calls from tenants who were facing foreclosure issues with landlords. Last year, it was 1,266.”

New laws are making the situation especially confusing. Last year, President Obama signed the “Protecting Tenants at Foreclosure Act,” which changed the law so that tenants in a foreclosed property now have three months before they have to vacate. State laws, however, can sometimes conflict with federal laws, adding to headache of deciphering renters rights. Vraa says, “the foreclosure law has changed in Minnesota four times in the last three years.”

Beyond understanding the law, many tenants don’t even know when their landlord is facing foreclosure. While some states require landlords to be forthcoming with their properties problems, most states do not. Some tenants have been forced to move out of their homes, even though they have paid their rent on time. In fact, Vraa says, “as compared to every other actor in the foreclosure world that has some blame — the bank, the owner — the renter hasn’t done anything wrong.”

One way that tenants can protect themselves, according to Vraa, is by asking the landlord if they are up-to-date on their payments to the bank. That could give the tenant the option for legal recourse if the property is foreclosed. Beth Kobliner, the personal finance contributor for the Takeaway, recommends getting everything that you can in writing — even if it’s just an email — which can be used as a legal document in court.

Kobliner also recommends that renters look at www.nolo.com or www.hud.gov to get more information about tenant rights. Local legal aid societies also offer services to low-income tenants, and the state Attorneys General can provide free information about tenant rights.

“The Takeaway” is a national morning news program, delivering the news and analysis you need to catch up, start your day, and prepare for what’s ahead. The show is a co-production of WNYC and PRI, in editorial collaboration with the BBC, The New York Times Radio, and WGBH. More at thetakeaway.org