March 13, 2009
Tenants’ rights
In Indiana, foreclosure terminates a tenancy. If the foreclosing financial institution takes the title, it often evicts the renter households very quickly.
“Renters who have the misfortune of having landlords who lose their property to foreclosure are the blameless victims of this catastrophe,” Andy Fraizer, Executive Director for the Indiana Association for Community Economic Development (IACED) who testified before the Senate panel in support of the legislation.
By the numbers
According to data collected by the Indiana Housing & Community Development Authority in 2007 there were 43,804 filings for mortgage foreclosures in Indiana. The department gives a conservative estimate of 6,000 to 8,700 of those filings were filed against the owners of a rental property. Twenty percent of all mortgages are rental properties. Forty percent of families impacted by foreclosure are renters.
Smaller units, bigger impact
According to Sen. Lubbers, the problem is predominately affecting smaller multifamily rental units such as single-family dwellings and duplexes, rather than the larger rental complexes because they usually go into receivership and tenants know about the foreclosures.
Solution
Legislation to fill notification gap between renter and landlord allowing renters to learn about a possible foreclosure so they are not forced to move in a very short time period. In some cases renters are given only a 24 hour notice to vacate premises.
Two similar proposals are under consideration: SB 225 authored by Sen. Teresa Lubbers (R-Indianapolis) and HB 1081 authored by Rep. John Day (D-Indianapolis). Both provide notification to renters when a foreclosure is underway.