In this time of economic difficulty, many new laws are being enforced} to help people get out of debt and prevent foreclosure. Such laws are coming into play in the national landscape as well being localized on state levels. What the current federal foreclosure law states is that residents of properties that have been foreclosed have 90 days tovacate the premises without the necessity to make mortgage payments during that time. These rules became a federal law in May 2009 when President Obama signed the legislation named “Protecting Tenants at Foreclosure Act of 2009” into practice. This new law is more important for lenders and homeowners facing foreclosure to comprehend.
This law applies to any mortgage loan that is federally related or is a loan on a residential property. Once a purchase has been made on a foreclosed home, the original borrower has 90 days to vacate. Every state is affected by this new law, so residents from California to New York now have an extended time to adjust their lives and make different living arrangements before being forced from their homes. This helps prevent families from being thrown into the streets without a roof over their heads, which is the reason behind the introduction of the law.
Different exceptions to the rule exist when contracts of a lease come into play. If there is a lease on the house, a bona fide tenant can remain in possession of the house for the remainder of the term. However, if the lease states that it is “terminable at will” according to state law, the tenant must still vacate within the 90 days. This is also the case if the new owner of the property from an auction will use the premises as their primary place of residence. It is important to understand that these new foreclosure laws and provisions only have an effect on tenant-occupied homes, not mortgagor-occupied properties.
The differences in laws on a state level have been lowered significantly, now that this new statute has come into existence and preempted older state and local statutes. The new foreclosure laws have a timeframe in which they will be effective. Since the country is facing an economic hardship that is expected to dissipate, the law will go out of effect at the end of 2012, allowing 2013 to begin as a new year returning to the old law. If the economy is not where it is expected to be at that point, the law may be revised and extended.
When there are tenants renting a home from a landlord who has lost the house to foreclosure, the situation always becomes more entangled, and it is likely that the occupants will fall through the cracks somewhere. This is much too often the case, as the family or occupants leasing the house or apartment may not even be aware of the foreclosure until a sheriff has posted an eviction notice on the property. Due to this new federal law, however, this type of scenario may become slightly easier for the occupants, if they are given notice of the foreclosure and have a chance to plan for their future.
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