Renters: The Forgotten Victim

I just do not understand why any Senator would vote against this amendment. I have done the best I can to research it, read up on it and look for any record of why 39 Senators voted against it. I am, of course (not really unless you are a dork like me), talking about S.Amdt. 1036: To protect the interests of bona fide tenants in the case of any foreclosure on any dwelling or residential real property, an amendment to S. 896: Helping Families Save Their Homes Act of 2009.

This amendment’s main goal is to help renters, such as my neighbors who have diligently paid their rent each month only to find out that the homeowner not only did not put that money towards paying the mortgage on the house but, in fact, the house is going into foreclosure and hence, they must soon move. For these gentlemen, it actually is not a huge crisis because they live elsewhere in the state and the five of them share this house as a central staging ground for when they all travel here on business. But for many other renters such a situation could prove disastrous.

Depending on state law, renters may face near immediate eviction if they live in a foreclosed home, regardless of how dutifully they have paid their rent. This can force families to move all too quickly, a particular challenge for many renters who might find the cost of a sudden move extremely cost prohibitive. The cost of moving can encompass everything from renting of trucks or movers, new security deposits that could be as high as the first two months rent, the cost of switching or restarting utilities, and possibly loss of wages if time off of work is needed to locate and/or move to a new place. Also, this creates an increasing number of vacant homes whose lawns and upkeep will only suffer all the more, thus bringing down the housing prices of surrounding homes.

To resolve this issue the Kerry-Gillibrand Amendment, would allow tenants to remain in their homes for the duration of their leases. Tenants without a fixed-term lease would be guaranteed 90 days’ notice before eviction. It also allows for the bank to still try and resell the property. If the unit is sold, the renter is to be given 90 days notice to find a new place. For example, I once held a two year lease on a property in Annapolis, MD, if after 6 months, the condo faced foreclosure I would have the opportunity to remain in the property for 18 months (although I can leave sooner if I want) unless the property is resold, in which case I get 90 days.

This seems like a win-win situation. As a reliable and hardworking renter who did not take out a mortgage I could not afford, I get to keep my home and/or I get enough time to make a move to the best location at the best possible time instead of having to move immediately to a place that might not best meet my needs. For the bank, instead of getting a home that becomes another toxic asset on their balance sheets, they get to receive a monthly payment that should be comparable to the cost of the mortgage payments they were NOT receiving and they also get to put the house on the market to sell if they want. Additionally, the amendment requires that the rent I pay would have to be at “fair market rent for the property” so that the bank will probably not lose any money by accepting the rent as mortgage. Moreover, with housing prices still falling, if I paid rent for 18 months, I would be giving the bank 18 months of consistent payments. This would allow the bank to wait for the housing market to rebound instead of selling the house at the current reduced price. And believe me, they are reduced. My newest neighbor bought the same model house as mine for 30,000 less than me this past February. Of course, I paid anywhere from 40,000-50,000 less than my other neighbors with the same house when I bought mine back in July. The point, I am trying to make is—why make a bank take on a home that they will have to sell at such a reduced value to get it off their books when they can instead take the time to wait out the recession while receiving rent payments in the place of a mortgage?

According to Sen. Gillibrand, “More than 30,000 renters across New York, who dutifully pay their rent on time each month, may face eviction because they live in a building that is about to be foreclosed. These tenants have almost no rights when a bank seizes their home. Families without the means to find temporary housing or move into another unit can be kicked onto the streets, because their landlord failed to meet his or her obligation to pay.”

So can somebody please tell me why 39 Republicans voted against it? Only one Republican voted for it, Olympia Snowe of Maine. Not a single Democrat voted against it. Yes, it passed regardless of the votes against it but what was the point of voting against it then? They knew it was going to pass, so why not show that they support renters in their time of need or was it more important to play opposition politics and vote no simply because the Democrats were the ones that supported the amendment.

Maybe there is something insidious about this amendment that I could not discern, if so, please let me know, because I have thus far not been able to find any record of the debate that must have taken place over this amendment. I really really want to know why Republicans would vote against a bill with so many upsides and no downsides that I can see. If it was merely to vote against Democrats, than I am sad, if not surprised. Americans are not nearly as deeply divided as our politicians. We want common sense solutions to problems that affect our lives, not partisan bickering (on that note if any Democrat had voted against this, I can assure you that I would be demanding to know why as well). I know not many people will have heard of this amendment or of who voted for or against it but hopefully I can change that. It is high-time that all politicians know that we are paying attention.

For those renters who fear that their landlords might face foreclosure checkout http://www.rentalforeclosure.com/ for assistance.

In case my hyperlinks fail here are the websites for the vote count and the text of the amendment:

http://www.govtrack.us/congress/amendment.xpd?session=111&amdt=s1036

http://www.govtrack.us/congress/vote.xpd?vote=s2009-182

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Scott P

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Thomas M.

8:31AM PDT on May 22, 2009

This is fraud on the landlord's part, they should put the landlord in jail, there would be less of this type of fraud.

send a green star

Scott P.

5:53AM PDT on May 14, 2009

Jamie,

Thank you for coming back and reading my reply. I'm glad we could have a decent dialouge on this subject. I cannot say how many homes or apartment buildings that are being rented out are in foreclosure but the US had over 2.4 million homes lost to foreclosure between January 2008 and 2009. In the last three months we have averaged over 300,000 homes per month which is a 30% increase over this same time period last year. It is not that the landlords do not want to use the renters' payments to pay the mortgage on their properties, it is that they probably have no choice but to use that money on the home they themselves live in. Who knows why the are in trouble (subprime readjustable mortgage rates, loss of job, medical bankruptcy, etc.) but the fact is that millions of Americans are losing the homes they live in. I am sure a fair percentage of those homes are ones that they rent out. It makes perfect sense that if someone owned two homes, they would do whatever they could to keep the one they lived in as opposed to the one they rent out.

Jaime J.

9:08AM PDT on May 13, 2009

Scott, thank you for your reply. You have given me a better impression of you.

And, I do agree that perhaps the party was concerned with the rights of owners. I am a home owner, and I rent a room out. If I were to go into foreclosure, my renter could not pay the mortgage on the place and therefore would have no answer but to be evicted. I wonder how many individuals are in this scenario.

I just cannot imagine there are that many people out there that are not using the rental money to pay for their mortgage. Seems like that hurts them way worse than just making their payments.

Mary R.

4:51PM PDT on May 12, 2009

I am sorry.I do wish more concem was given to the little guy.

Vanessa H.

1:49PM PDT on May 11, 2009

If the house is entering foreclosure, then there IS no owners to be concerned about...unless you consider the bank an owner. I've been a tenant, an owner, a landlord, and involved in forebearance and foreclosure. No tenant who has abided by the terms of his lease should find himself unexpectedly and immediately homeless because of his landlord's failure to pay. Tenants need this protection; rentals, at least in the area where I live, are more than double what mortgages on the same property are, so without protection, too many tenants will find themselves homeless.

Lukntwohvn R.

6:54AM PDT on May 11, 2009

What would have been nice to see added into this Amendment was a clause stating, "Option to Purchase" for the renter. Since the banks are getting stuck with a Foreclosure anyway, why not really make it beneficial for both and give the renter the option to purchase the home with a smaller down payment and, perhaps, a lower interest rate. If they really want to 'boost' the economy and have the banks make back money and gain business, this would be a perfect opportunity. Ahhh, but then again...that may make too much sense!

5:46AM PDT on May 11, 2009

Uh Jamie J,

I posted the link to the full text of the bill and I think it is great to praise that it passed but I think it is just as important to point out that a political party (in this case the Republicans...it could have been the Democrats I would have attacked them either way) voted nearly unanimously against an amendment merely because it was drafted by the opposite party. A good idea should be supported regardless of where it comes from. If it had been a mix of Democrats and Republicans voting against it or a smaller percentage of either party I would have just touted its passing but since it was all but one Republican senator voting against the bill, I think I am more than justified in critiquing their voting record. That is why voting records are public.

And as far as greed goes, you are right that it was probably something else because the banks give as much money to the Democrats as they give to the Republicans but the Dems still voted for the bill. I think this had less to do with money or doing the right thing and more to do with a unified party opposition to any idea no matter how good it might be if it comes from the Democrats. Republicans strongest feature is that they produce uniformity of action, whereas Democrats due to their larger umbrella are rarely capable of pulling off such party solidarity. I at once admire the Republicans ability to stand together, while lamenting their need to oppose anything from the Democrats.

Joshua A.

10:27PM PDT on May 10, 2009

Fankie P "The Republicans likely were concerned with the rights and liberties of the owners and see such legislation as intrusive and just yet another loss of freedom."

Very true!!!

Frankie P "Still, I do wish more concern was given to the little guy, the tenant and that more support for their interests were forthcoming. "

Also with ya here!!!

10:16PM PDT on May 10, 2009

I see this as close to a no brainer. This would be extremely beneficial to the society as a whole, however there should be protection clauses in the amendment prohibiting a monetary loss. As an owner of a rental property there are months and sometimes years where money seems to fly out the window and I ask myself why I hold on to the property. An example would be a property in poor condition where tenants have 3 month's left; they pay $350 a month; something happens requiring maintenance costing $1000. $50 is lost plus the prorated property taxes as well as other expenses. Same scenario what if you held the contract on this property foreclosed and then was forced into these conditions? We need to help the tenants but at the same time take precautionary messures to protect those foreclosing on the property.

7:56PM PDT on May 10, 2009

Again Scott, you criticize the republicans while the general public on this website has no idea of the logistics of this bill. Rather than continue to derail the opposite party, could you not have used this as an opportunity to promote a bill that has been passed? Personally, I have no right to vote on whether it was a “no-brainer” or not. I have not studied it. Rather than make this another opportunity to DIVIDE, couldn’t you have just praised the fact that it passed, if indeed that is what you believe should have been done?
And Brian E and others who have stated that this is just “republican greed”. How? How would that ever benefit anyone’s greed? In fact, if you look at it, the banks seem to benefit more this way than they would the other. So, there must be another reason why these individuals voted against it. I don’t know what it is, and NEITHER do you, so NEITHER of us has the right to judge! Stop dividing this country even more with your rhetoric. Until we begin to find common ground, our country will continue to deteriorate.