- June 27, 2018
- All Issuing Offices
- UNDERWRITING - Protecting Tenants at Foreclosure Act of 2009 - Rights of Tenants in Foreclosed Properties
The Protecting Tenants at Foreclosure Act of 2009 (“PTFA”) was enacted on May 20, 2009 (PL. 111-22, Title VII, Sec. 701 - 704; 12 U.S.C. 5201 note; 12 U.S.C. 5220 note; 42 U.S.C. 1437f note). PTFA provided certain protections limiting post-foreclosure eviction of tenants in certain residential properties.
PTFA was originally set to expire on December 31, 2012. The Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted on July 21, 2010 (the “Dodd-Frank Act”) and extended the expiration date of PTFA to December 31, 2014, at which time it expired.
On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (Public Law No 115-174) was enacted. It amended portions of the Dodd-Frank Act. Section 304 of this Act repealed the sunset provisions of PTFA and restored and revived PTFA, effective as of June 23, 2018.
PTFA applies to tenants in any foreclosure of a federally-related mortgage loan or on any dwelling or residential real property. A “federally-related mortgage loan” has the same meaning as in section 3 of the Real Estate Settlement Procedures Act of 1974 (12 USC 2602). This includes a loan on a one-to-four family residential property, including individual units of condominiums and cooperatives.
PTFA requires the immediate successor in interest in such property (which may include the foreclosing lender) to provide a 90 day notice to vacate to any bona fide tenant. If there is a bona fide lease entered into before the notice of foreclosure, the successor in interest must assume the property subject to the rights of any bona fide tenant to occupy the premises until the end of the term of the lease. An exception exists for a purchaser who will occupy the unit as a primary residence. In those circumstances, the lease may be terminated, but the 90 day notice requirement still applies. PTFA does not affect the requirements of any Federal or State-subsidized tenancy or of any state or local law that provides longer time periods or other additional protections for tenants.
After a foreclosure, you must determine that there are no parties in possession of the property, including tenants. Otherwise, you must retain a standard exception such as "Rights or claims of parties in possession not shown by the Public Records" unless otherwise approved by a Stewart Title Guaranty Underwriter.
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- Bulletins Replaced:
- Related Bulletins:
- SLS2010023 Insuring at or after Mortgage or Deed of Trust Foreclosure
- Underwriting Manual:
- 15.04 Parties In Possession