Obama Passes Tenants Bill of Rights; Buying Frenzy In Phoenix

Lost Vegas

During the boom years, no place in America boomed more than Las Vegas. But when the economy collapsed, Vegas fell hard. Laura Ling tours the wreckage of Sin City, from unemployed strippers and half-built, abandoned casino projects, to hospitals turning away cancer patients and ambulances, to one of the few remaining boom industries–evicting people.

The forced "no notice" evictions in the Lost Vegas video are very disturbing. If someone is not paying the mortgage on their property and is evicted I have little sympathy. However, the video shows multiple instances of "no notice evictions" as many as 13 a day, that give renters as little as 20 minutes to leave with nowhere to go and no place to put their belongings, even if they are current on their rent.

This is theft in my opinion, and I am quite sure the practice is not limited to Las Vegas.

Evicting Entire Rental Buildings

In response to Lost Vegas, "Tin Hat" replied in a comment:

A friend of mine experienced a "no notice" eviction in Ft Lauderdale December of 07. Her rent payments had been on time.

Luckily for her, she caught wind of it/heeded the rumor a week before it happened and found a place to move. As she was taking the last few boxes out of her apartment, the State police showed up to start mass evictions. Those tenants that didn’t know, were forced to leave with what they could carry on their backs and nothing else. They were not allowed to go back for anything that was left. So they not only lost the roof over their head, they lost most of everything they owned.

What happened to those people who didn’t have some one to take them in on no notice?

Tenants rights? In these cases, there are no tenants rights. It’s disgusting. They force people into homelessness through no fault of their own. It’s unconscionable. IMO, if a bank is going to foreclose on rental property, they should have to provide adequate notice to the renters, not just the mortgage holder.

She still rents. I worry it will happen to her again.

What an amazing bunch of idiots to kick out good renters in a foreclosure process. Not only is the practice theft, it is point blank stupid. Imagine how much harder it is to sell a rental building with 0% occupancy than one fully rented!

At any rate, I am pleased to report that such theft of private property will stop as of May 20, 2009.

Protection For Renters

Unbeknown to me, the despicable practice of "No Notice Evictions" came to a screeching halt on Friday when Obama Signed New Federal Law Protecting Renters after Foreclosure.

Under the Helping Families Save Their Homes Act, tenants have the right to stay in their homes after foreclosure for 90 days or through the term of their lease. The bill also provides similar protections to housing voucher holders. The protections go into effect immediately and expire at the end of 2012.

At least one third of the units going through foreclosure in California are rentals. Under current law, most California tenants are entitled to 60-days notice of eviction after foreclosure. The new federal law increases this to 90 days.

The NLIHC sent out a memo on Protections for Tenants in Foreclosed Properties.

President Obama signed S. 896, P.L. 111-22, on May 20, 2009. This bill includes a nationwide 90 day pre-eviction notice requirement for tenants in foreclosed properties. The provisions of the bill are effective on enactment, May 20, 2009. Specifically, the new law will require that the immediate successor in interest at foreclosure

• provide bona fide tenants with 90 days notice prior to eviction and
• allow bona fide tenants with leases to occupy the property until the end of the lease term except the lease can be terminated on 90 days notice if the unit is sold to a purchaser who will occupy the property.

A bona fide lease or tenancy is one where the tenant is not the mortgagor or a member of the mortgagor’s family, the lease or tenancy is the result of an arms length transaction, and the lease or tenancy requires rent that is not substantially lower than fair market rent or is reduced or subsidized due to a Federal, State or local subsidy.

None of these provisions preempt more protective state and local laws and all of these provisions expire at the end of 2012.

Pray tell, exactly why does the law expire on 2012?

New Buying Frenzy In Phoenix

The New York Times article Amid Housing Bust, Phoenix Begins a New Frenzy details just how stupid banks were to be evicting good renters. Let’s tune in:

Every weekday morning, Lou Jarvis drives the sun-baked suburban streets looking for investment gold: a family that will lose its house in a foreclosure auction within a few hours.

If the property looks promising, Mr. Jarvis puts in a bid on behalf of any of his dozens of clients eager to become landlords. When he wins, he offers to let the family stay in the house and rent for much less than their mortgage payment.

On some days, hundreds are offered for sale at the auctions that take place on the plaza in front of the county courthouse.

There is also a large supply of foreclosed families who can no longer qualify for a loan. And that is prompting a flood of investors like Mr. Jarvis, who wants to turn as many of these people as possible into rent-paying tenants in the houses they used to own.

Absentee buyers, who can be either investors or individuals purchasing a vacation property, bought nearly 4 of every 10 homes sold in the Phoenix metropolitan area in April, according to the research firm MDA DataQuick. That is up 50 percent since late 2007, and is nearly the same ratio as at the 2005 peak.

Buying properties that are cash flow positive with good tenants is a reasonable thing to do although I am quite skeptical about attempting to manage properties long distance. However, the key point is a nice free market business proposition has sprung up to handle the housing crisis. It seems to be doing quite fine, thank you.

Congress needs to stick to legislation that protects property rights and otherwise let the market heal itself. In due time it will, if only left alone.

Mike "Mish" Shedlock