Update: Renters in Florida face the same plight. Article here.
Update: Fannie, Freddie and Task Forces around the country are ignoring the new tenant law as well (article here).
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It should come as no surprise that the industry who created and pushed complex and risky loan products to American homeowners have even less regard for tenants who are victims of foreclosure. As explained more here, Congress and President Obama enacted the “Protecting Tenants at Foreclosure Act” in May 2009 which entitles a tenant to continue leasing from the new owner of the property after a foreclosure sale until the lease expires on its own, or 90 days (whichever is longer). The only exception is if the new owner intends to occupy the property as his primary residence.
Lenders apparently did not consent to the law. Rather than show up to congressional townhall meetings and scream, some it seems may be attempting to trick tenants into leaving by drafting misleading and complex notices to vacate and sending them to the occupants of the property after every foreclosure. If they will dupe homeowners, why not tenants too?
For example, the law firm of Barrett Daffin Frappier Turner & Engle, LLP (“a national law firm dedicated exclusively to the mortgage banking industry” article), sent an “Occupant” of a home in Pflugerville, Texas a three page letter on behalf of the Bank of New York Mellon on August 13, 2009. The first page boldly states in very large 18 point type:
IMPORTANT INFORMATION IS CONTAINED WITHIN THE ATTACHED NOTICE.
PLEASE READ CAREFULLY
BARRETT DAFFIN FRAPPIER TURNER & ENGLE, LLP IS A DEBT COLLECTOR ATTEMPTING TO COLLECT A DEBT. ANY INFORMATION OBTAINED WILL BE USED FOR THAT PURPOSE.
Here is the letter (with the full address and loan number redacted).
So, a tenant who has been paying her rent to a landlord who may not even know a foreclosure sale has occurred is going to be interested in carefully reading this inviting letter addressed to Occupant? Here is a case out of Barstow where the tenant did not know anything and the landlord was still collecting the rent (and Barrett Daffin did the foreclosure).
If a tenant were to read the letter, might they be a little worried to call this firm to get more information? I suspect some tenants might believe they are somehow liable to this law firm or someone else and be afraid to call. Not to worry though the letter is unsigned and does not even have a person’s name on it to call, just the phone number and suggestion to call the “Eviction Department” for questions; but that is at the end of page two of the letter and I am getting ahead of myself. The bottom line is that most tenants may not even read past the first page.
The second page actually looks like a letter, but the text was shrunk to 8 point type with exceptions of the name of the firm, the Occupant’s address, the words “Notice to Vacate” in some form printed boldly four different times and the lender (as trustee of a securitized trust). What does that tell the average person?
OCCUPANT blah, blah, blah, blah, blah.
ADDRESS blah, blah, blah, blah, blah.
NOTICE TO VACATE blah, blah, blah, blah, blah.
BANK blah, blah, blah, blah, blah.
NOTICE TO VACATE blah, blah, blah, blah, blah.
VACATE THE PREMISES blah, blah, blah, blah, blah.
NOTICE TO VACATE TO BONAFIDE TENANT(S) blah, blah, blah, blah.
LAW FIRM blah, blah, blah, blah, blah.
Don’t believe me, look at the letter yourself here. The letter is addressed on both the first and second pages to the “Occupant,” not the debtor or the homeowner. Clearly the notice is meant to provide “Important Information” to any occupant regardless because the lender does not know who is living there. Fine, but I wonder if providing important legal information to another person constitutes legal advice? I wonder if providing legal advice to another person makes that person a client? Hmmm.
Anyway, while we know that this new owner of property purchased at a foreclosure sale must honor an existing lease agreement a bonafide tenant had with the previous owner (unless Bank of New York Mellon plans to move to Pflugerville), this letter addressed to any occupant (and the occupant was a tenant) is titled:
RE: NOTICE TO VACATE the premises at
XXX SOMETHING DR
PFLUGERVILLE, TEXAS 78660
The letter just keeps getting better. After stating the full name of the new owner (not just “The Bank of New York Mellon” which would be sufficient in order to sue it for example), the letter lists the entire name of the former entity that was the bank and then the trust that probably once held the loan that was foreclosed on (i.e., The Bank of New York Mellon formerly Known as the Bank of New York, as trustee for the Certificateholders CWALT, Inc., Alternative Loan Trust 2006-26CB, Mortgage Pass-Through Certificates). And I spared you plenty … the full name of the trustee, the old name of the trustee and the name of the trust is actually listed in the letter in all capital letters, bolded, and underlined … TWICE in the first two sentences of the letter. No kidding.
If you managed to read the letter this far, after getting some glasses to make out the 8 point type (I measured it) that is not in all capital letters, underlined, and bolded; the third sentence explains one provision of the deed of trust that the lender wants you to know:
The Deed of Trust provides that any person in possession of this property is a Tenant at Sufference and may be removed by Writ of Possession.
Sounds pretty scary I would think — this must be the important information they wanted to share as they promised on the first page. The question most might have after reading this: ”Am I going to get arrested for being a tenant at sufference?” The next heading is then another “Notice to Vacate” in all caps, bolded and underlined, with the next sentence “This letter constitutes formal and final demand that you VACATE THE PREMISES located at … within three (3) days of the date … If you fail to comply with this demand, this firm has been authorized to file suit against you immediately or at our option, after ten (10) days … in the latter event, if you have not vacated within ten (10) days … you may be liable for the attorney’s fees and costs of court which have been incurred.”
And the next heading says “NOTICE TO VACATE TO BONAFIDE TENANT(S)“. Nevermind that a tenant who has a lease can continue to lease from the new owner, they are giving all of them a notice to vacate, and this is fourth time they said so without exception. The first sentence under this heading gives tenants “without a lease or with a lease terminable at will under applicable Texas law” 90 days to vacate. What leases are terminable at will? It does not say; this is not the important information they want you to know.
Finally at the bottom of the letter the lender, through counsel, decides to mention some of the law that might be applicable, but hedging where it could:
Subject to the terms of the Act, if you are a bona fide tenant and you are occupying the premises under a bona fide lease that you entered into before the notice of foreclosure, you may be entitled to occupy the premises until the end of the remaining term of the lease.
Then the lender demands the tenant supply its lawyers with a copy of the lease agreement or other evidence of the tenancy within 10 days of the letter otherwise the lender has authorized an eviction case be filed against the tenant. While the letter admits that the failure to confirm your status as a tenant within 10 days does not waive your rights (since it is not in the Act), it does mean that tenants who are vacationing, visiting friends, taking care of sick family members, working out of state, etc. at the wrong time will be evicted who should not have been because this firm was told to do it. (Eviction papers do not have to be personally served in Texas (Rule 742a), and even after service on the property, the defendant is still required to appear within 6-10 days otherwise a default judgment can be entered per Rule 739 of the Texas Rules of Civil Procedure.)
For the ones that don’t read the letter at all because of its friendly beginning or fail to respond with proof of their lease satisfactorily in time, they will be sued in court for eviction. And if their name is ever used in the filing, the tenant will be victimized yet again regardless of the outcome of the case because in this age, mere eviction filings are tracked by special tracking services and it rarely makes any difference to a landlord what the circumstances were — just having an eviction filed against you is a major negative.
The letter closes with a warning that the letter warrants attention, to call the Eviction Department with questions, and that any information obtained will be used by them as a debt collector.
I don’t believe that one lawyer wrote this letter in a vacuum, and I am not blaming the law firm of Barrett Daffin unlike some judges who have sanctioned them for their conduct. See article here claiming to list the firm’s srcapes. It was undoubtedly written by a group of many lawyers that represent the industry, and the industry, including this lender must have seen and approved this letter. I was told I might see a version of this letter being used across the country. (“Ver-16″ appears at the bottom, so one might think there are at least other 15 versions.) Barrett Daffin is merely said to represent “many of the nation’s leading mortgage banking organizations in matters ranging from contract enforcement to regulatory compliance. The firm and its affiliated companies have more than 700 employees dedicated to serving its clients and their customers.” See article here which ironically but not surprisingly also mentions Barrett Daffin’s continued financial support of NeighborWorks’s pathetic foreclosure prevention program (see article on NeighborWorks here).
The industry wrote this letter. Of course the industry will claim that it does not know if a tenant or the former homeowner is occupying the property after a foreclosure, which is probably true. Thus, the letter must be contingent. Agreed. The problem is that one might easily demonstrate that whether by design or default this letter will deceive tenants — the people that Congress and the President intended to protect with this new federal law. Rather than embrace the law, the industry is likely hoping to blunt it with letters like these. If this letter was not meant to trick tenants into leaving immediately, it would be hard to imagine one that was. Read it and decide yourself here.
Filed under: Advice for Borrowers, National Foreclosure News
Despicable. May I share this & the letter with folks in Baltimore?
Sure. It is on the web for a reason. Something tells me it is already being distributed by lenders. Thanks.
This bad behavior has been happening in California for some time. Lenders send letters telling tenants that if they don’t take the cash for keys offer and leave in x days, the lender will begin eviction proceedings. Well yes, but that requires first serving a 90-days notice and waiting the 90 days before beginning what most tenants think of as “eviction proceedings” (a court action). Thanks much for putting this up. I’ll link to it on my blog.
And what disturbed me about the Barstow case was that it appears that Fair Housing was giving the tenants bad information. (That’s one of the problems with Fair Housing, as they get much of their money from realtor group donations.)
Well, I certainly appreciate the writers thoughts, but there is an important point in Texas law that when combined with the new federal law, may have some wondering what the real conclusion should be. In Texas, if a mortgage was in place before the lease, or if the lease had a subordination clause making it second in position to any subsequent mortgage, then the lease becomes a “terminable at will” following a foreclosure. And the federal law says a “terminable at will” lease does not continue until the end of the lease term unless the purchaser of the foreclosed property agrees to such. Otherwise, the purchaser is only required to give 90-days notice.
Since most lenders do not know that the home they have a mortgage written for was leased out, they are asking for a copy of the lease from the current occupant, since the person who was foreclosed on is probably not going to cough one up. If they don’t get a copy of the lease, they presume that the lease is either not in writing, or it’s a month-to-month lease, and hence requesting that the occupant vacate in 90-days or less is simply the law, not some rampant conspiracy theory.
Essentially, all leases in Texas following a foreclosure are “terminable at will”, unless under the very rare circumstances the lease was written prior to the mortgage, AND the lease agreement did not make any subsequent mortgages superior in position.
Well, I certainly appreciate the comment above, but it is incorrect. But it is this kind of creative thinking lenders so much appreciate and pay for. I am hopeful Texas courts will not bite on more lender double speak and follow the law as it was written and intended. Most every state in the country had laws similar to Texas — after a foreclosure the tenant’s lease was terminated at will by the new owner. While the language might be confusing, a careful reading of the text, the legislative history and HUD regulations demonstrate that the Act applies to Texas just like the other states. If the property is residential, and there is a bonafide tenant renting the premises prior to the foreclosure, the new owner must honor the lease (unless the new owner is going to occupy the premises as his primary residence).
We just went to court today because we are tenants and knew our rights and legally had 1 more year on our lease. Lo and behold, the attorneys of Barrett Daffin’s pulls out this very same “terminable at will” in Texas talk and we lost. What can we do? We have 5 days to appeal
You appeal and later sue the lender if need be. Barrett’s own letters have substantially improved since this posting. I will put one up on the site soon.
It would appear that a law firm whose primary focus is advising large lenders in Texas and the rest of the country disagrees with the commenter “BetterKnowTheLaw”. Instead the firm tries to hide the truth, rather than deny it even applies like the commenter:
http://foreclosurebuzz.org/2009/08/28/lenders-to-trick-tenants-out-of-their-rights-next/
Betterknowthelaw, you really should read the Protecting Tenants at Foreclosure Act before posting. Specifically Section 702a2A. You are incorrect.
I love reading these articles because they’re short but inforatmvie.
I am in California and the attorney for Freddie Mac left an almost exact letter as the one in the example from of Barrett Daffin Frappier Turner & Engle, LLP
They are the lawyers THEY SHOULD KNOW THE LAW and what to give a tenant.
I am so angry over this mess I am in the middle of AND for all the people who lost homes. The nerve of the lenders considering THEY created this crisis and who bailed them out?
THIS IS AMERICA? how sad
We are being evicted illegally by Deutsche Bank and a sleazy realtor–under the name of “Owner AND ALL OCCUPANTS”. The bank and realtor were told more than 10 times, some in writing, that the owner does not and did not live on the premises, that we are tenants, some protected by CA 60-day notice for tenants in foreclosure, and some protected by the PTFA’s 90-day notice, and some even protected longer with their leases that can affford even longer stay.
The Realtor and the Bank just went ahead a filed an illegal eviction anyway KNOWING the owner did not reside at our home and that ALL OCCUPANTS are tenants and bonafied tenants under lease and KNOWING we are protected by federal and state law.
Now we have to hire an attorney, answer the suit in OC Superior Court, and do all this while my son is having recurrent epileptic seizures, my mom is in the hospital from a stroke she suffered from the melee, I am a single mom with three kids, and I am being evicted.
By the way, the FORECLOSURE on the owner was ILLEGAL as well!
Go Bilderbergers!
I am reading this a few years too late. But I really hope everything worked out for you and your family.
I too was tricked/forced by the reo and foreclosure atty and eviction paralegal.
I had a court order that told me to go home and cont.
my payments.
The Judge would not decide on my the case. Told the seller she was in alot of trouble. She did not own the home and had no license to sell the owner. She had apparently figured out a how to get 3,500 down from me and 775. month. “interest” only. 5 years to get it refinance. I did all that it state after 2 months she took
me to court on weeds (which I was not introuble from
the city.
They tried threats/trickery and couldn’t convience me Ihad to leave…the owners let the house go back to Citibank…I emailed everything I could think of stating I
did not want cash for keys the foreclosurer atty emailed and told me if I worked out something with the
reo they would let hime know. The reo emailed me twice between threats that “all tenants had to received “at least 90 days notice. Well I didn’t I agreed twice that that was a start…instead friday night at 5:05 civil sheriff, that had closed at 4:30 posted 72 hours.
Monday morning I got the email from reo last chance be in my office and sign cash for keys by 3: or Lock out is at 8:30 am tomorrow My cripple son and I packed what we could because after signing the cash for keys against everything we said previous…it was 10 mins before lock out when the sheriff finally got the call from reo ‘like oh by the way I should have called yesterday!”
anyway we stayed for 3 weeks and finally wiggled into a place 2 hours before lock out again…no time to mow
the place would pass anyway the person hadn’t come back to do clean up from last tenants mostly garage and laundry room that we lived around all this time.
This really does suck… My roommates and I are stuck in this very situation and the new ‘owner’ isn’t budging… We’ve filed a complaint against her through consumer affairs…We’ve made it SO clear to her that we are aware of our rights… She keeps insisting that we are wrong and keeps threatening to file an “unlawful detainer” suit or start eviction on us. She’s so confident in her words it always gets us second-guessing… She’s sent us a handful of notices… including “3 day notice to pay rent or quit” on the day our house was sold at auction…last week she served us with a 24 hour notice to enter the house and said we needed to give her a copy of our keys. Of course we didnt… and now she sent us another 3-day notice to pay rent or quit (with a new rent amount, mind you)…and saying that we are already delinquent in payment!! AGHHH!!!!!!
Hi Robert. Thank you so very much for publishing this information. I, too, recently received a similar letter that you referenced, and from the exact same law firm. Additionally, a Sherif’s Constable showed up this morning to inform me of the eviction court date for next month.
Fannie Mae now owns the property I rent. Did I have 90 days after the foreclosure initiated back in December when the REO agent showed up at my door…or am I okay to live here until somebody else buys the property? I actually have no intention to stay once a new “buyer” comes on board since that wouldn’t be fair to them. But I’m simply looking for a due & fair process; i.e., not to be evicted with three days notice as the law firm’s letter states.
One other thing, my original lease was for one year. I am now close to finishing the second year of renting here. But after one year, the landlord & I continued on at the existing rate of the original lease contract; basically, month-to-month with no price increase. Looking back at things, I guess he was happy to have a good renter paying on time each month and/or maybe knew that he would eventually have to default, etc.
Thanks in advance for your response! R.C.
What are the legal remedies and options if the lender does not honor the lease and files illegal eviction. In situation in Texas. New owner is bank OWB. Realtor, lender and eviction attorney all have recd copies of lease agreement and payments. I have yet to receive notice of where to send payments although have received 2 cash for keys offers