New Report Compares National Banks’ Rental Policies
Tenants Together, California’s statewide organization for renters’ rights, released a report yesterday surveying bank policies toward tenants after foreclosure. The report, entitled Without Justification: Banks Continue Mass Displacement of Innocent Tenants after Foreclosure
analyzes rental policies and actions of the major national banks that have acquired tenant-occupied foreclosed properties. According to the report, only Fannie Mae, Freddie Mac and JP Morgan Chase have adopted any type of policy to move away from automatically evicting tenants after foreclosure.
Tenants are innocent victims of a foreclosure crisis they did nothing to create. Tenants Together conservatively estimates that at least 37% of residential units in foreclosure in California are rentals. As a result, over the last 3 years, over 500,000 California tenants have been directly affected. Most of these tenants have been displaced from their homes.
In May 2009, President Obama signed the Protecting Tenants at Foreclosure Act, which made clear that banks acquiring tenant-occupied homes step into the shoes of the pre-foreclosure owner, inherit the terms of the existing rental agreement, and have the obligations of landlords. Despite the federal law, as well as the clear financial benefits of continuing to rent to tenants rather than letting homes sit vacant in stagnant real estate markets, national banks have continued to displace tenants on a massive scale.
According to Dean Preston, Executive Director of Tenants Together, “Banks are gobbling up millions of renter-occupied homes across the country through foreclosure. There’s no rational reason for them to kick out innocent renters after foreclosure. They should start acting like reasonable landlords.” The report notes that policy makers, including Federal Reserve Board Governor Elizabeth Duke, are recognizing that it makes sense to continue renting to tenants after foreclosure.
In May 2010, Tenants Together issued its 2010 Win-Win Proposal: A Proposal for Banks to Continue Renting to California Tenants after Foreclosure
to all major national banks. The Win-Win Proposal urges banks to comply with tenant-protection laws and to continue to rent to tenants after foreclosure. Bank of America and OneWest failed to provide a written response. US Bank, Wells Fargo, Citibank, and Deutsche Bank provided unsatisfactory responses. Citibank admitted that it does not return security deposits, a direct violation of California law. Only JPMorgan Chase confirmed that it has adopted rental policies in line with those of the Win-Win Proposal. The report includes a table with details on each bank’s response.
JPMorgan Chase joins Fannie Mae and Freddie Mac as the only major financial institution with rental policies that give tenants the option to continue renting after foreclosure. Unfortunately, these rental policies are undermined in practice by the actions of real estate agents and eviction lawyers hired by the banks to handle their tenant-occupied properties.
Banks will continue being landlords for years to come. Why not earn rental income, prevent homelessness and earn the goodwill of their communities? Banks should promptly meet the demands of Tenants Together’s Win-Win Proposal and change their rental policies.
Gabe Treves is the Program Coordinator of Tenants Together.