Tenant Advocates Petition Federal Housing Administration to Stop Misleading Residents About Their Rights Under Federal Law


WASHINGTON, D.C. – February 23, 2011 – (RealEstateRama) — The National Housing Law Project, the National Low Income Housing Coalition, the National Law Center on Homelessness and Poverty and the Housing Justice Network have petitioned the Federal Housing Administration (FHA) to stop forcing lenders to give misleading and deceptive information to tenants in foreclosed homes – information that leads tenants to forego rights guaranteed to them by the federal Protecting Tenants at Foreclosure Act (PTFA).

Enacted in 2009 in response to the devastating impact of the foreclosure crisis on tenant households, the PTFA provides that bona fide tenants may live out their leases and must receive at least 90 days notice to leave from the new owner (which could include the Department of Housing and Urban Development) (HUD) before either that owner or HUD can evict them.  Nonetheless, for more than nine months, the FHA has refused requests by tenant advocates that it inform occupants of FHA-insured homes undergoing foreclosure about the PTFA and the many state and local laws that protect tenants from immediate eviction, leading to a formal rulemaking petition filed late last week.  “Advocates fought hard for the passage of the PTFA to protect tenants from the immediate loss of their homes when their landlords are foreclosed upon,” said Sheila Crowley, President of the National Low Income Housing Coalition. “It is sadly ironic that we have now had to petition the Federal Housing Administration to ensure that tenants in FHA-insured homes are protected.”

The problem stems from FHA’s insistence on following its decades-old Occupied Conveyance policy of requiring the foreclosing lenders to send a letter, between 60 and 90 days before the lender thinks foreclosure will become final, telling families that their only chance of staying in their home once the lender transfers title to HUD is to get HUD to agree that the family meets very restrictive requirements. The letter fails to inform tenants of their right to stay in their home for a much longer period under the PTFA.  As a result, many tenants suffer the premature loss of their home.

“The foreclosure crisis has dramatically increased homelessness,” reported Maria Foscarinis, Founder and Executive Director of the National Law Center on Homelessness and Poverty. “FHA must do everything in its power to prevent even one unnecessary incident of homelessness of a family that lives in an FHA-insured home.”

HUD reported a total of 99,653 conveyance claims on single-family insured mortgages during FY 2010 (up 42.8% from FY 2009), and the problem is only expected to get worse.  While there is no data available on the number of tenant-occupied homes in this FHA-insured inventory, other data estimates that approximately 40% of households affected by foreclosure are tenant households.

“Because the FHA Occupied Conveyance policy is not mandated by statute, it can be amended by HUD without any Congressional action,” stated Marcia Rosen, Executive Director of the National Housing Law Project.  “With a stroke of the pen, HUD Secretary Donovan or FHA Commissioner Stevens can fix this problem and prevent harm to thousands of tenants. That is what we’re hoping they will do.”

David T. Rammler, 202-347-8775,

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