March 13, 2009

Lawmakers addressing mortgage foreclosure problems

By Brigid Curtis Ayer

The mortgage crisis is not just affecting homeowners.

Testimony at a March 4 Senate hearing indicated that a prevalent fallout of the mortgage crisis is negatively impacting another group—renters. Tenants are being forced from their homes through no fault of their own, and given little if any notice about these mortgage foreclosures. (Related: Foreclosures: What rights do tenants have in Indiana?)

Lawmakers cannot stop the foreclosures from occurring, but Sen. Teresa Lubbers (R-Indianapolis) and Rep. John Day (D-Indianapolis) are doing their part through legislation they have authored to ensure that tenants are at least receiving some kind of notice prior to a foreclosure and a possible change of address.

Rep. Day described a typical scenario of the problem this way. “Someone shows up at the tenants’ door and tells them they have 24 hours to leave. When the tenant asks why [since] ‘I paid my rent last month,’ the person replies, ‘the property was sold to XYZ company in Florida.’

“The tenant replies, ‘Well, I wasn’t given a notice.’ The person says, ‘I’m sorry, but I’ve got a court order saying that you need to be out of the property in 24 hours.’ ”

Rep. Day said the problem is affecting all types of renters, including young married couples, college students, the elderly and families with children.

Senate Bill 225 requires the landlord to give the notice. House Bill 1081 requires the bank to give notice. The bills also provide some remedy if a foreclosure occurs.

“One of the problems is the landlord may have already defaulted on a loan, and they are gone,” Rep. Day said. “One question we are asking is, ‘How good is the remedy if the landlord is gone?’ You can see this is not an easy issue.

“The purpose of the bill is to tell tenants that their building may be foreclosed, and what rights and options do they have at that point. We’re trying to negotiate that through,” Rep. Day said. “Who should give that notice? When should it be given, and if that notice is not given and there is a wrongful eviction, what remedies does the tenant have?”

Sen. Lubbers said, “The intent of the bill initially is to provide notification to renters when a property had been in foreclosure so that there wouldn’t be this very short window of time when a person could be told, ‘You need to be out of here.’ These people are paying their rent. They are meeting their responsibilities. But for something that is outside of their control, they may have to move.

“That probably will still be the case, but at least there is some control [in the] timing of the move,” Sen. Lubbers continued. “Renters need to have some ability to know when this is happening.”

Sen. Lubbers noted that there is not any outright opposition to the bill, meaning that most people agree with its concept.

“The negotiating now is more about trying to determine who is going to be responsible for notifying the tenants of the foreclosure,” she said.

“The lending institutions don’t want to be in the business of notification,” Sen. Lubbers said. “My hope was to have the agreement be between the landlord/owner and the tenant. In this case, it would be the landlord’s responsibility to notify the tenant of the foreclosure. But there are some circumstances where the landlord is gone.

“That is the problem, and it’s going to happen. There is no way we can address every situation in this bill or in the amendments that we have been working on, but we’re hoping we can provide some notification and then some remedies as well,” she said. “If the person who is in foreclosure has no money, it’s going to be hard for the tenant to recoup any of the loss from them. But we allowed in this legislation some ability for the tenants to recoup some of the costs of relocating and legal fees if they are able.”

Sen. Lubber’s bill, Senate Bill 225, passed out of the Senate with only two “no” votes.

“But since then, it’s gotten weighed down,” she noted. “Now it’s like a moving target. As soon as we address one concern, others are raised. Most of the renters would prefer not to leave so we are trying to work out some of those details. There are landlord/tenant regulations, but this seems to be a gap.”

Glenn Tebbe, executive director of the Indiana Catholic Conference, said, “The Church is supportive of the legislation because people should not be put under this kind of stress, especially when these situations could be avoided with proper notification.”

(Bridget Curtis Ayer is a correspondent for The Criterion. To learn more about the Indiana Catholic Conference, log on to

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