Homeowner Bill of Rights to protect renters, investigate fraud

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Gov. Jerry Brown signed two bills into law last week intended to increase protections for renters in foreclosed properties and investigate financial fraud.

Assembly Bill 2610 and Senate Bill 1474 — both authored by Berkeley’s state representatives — are part of the Homeowner Bill of Rights, an associated set of state laws aiming to respond to the foreclosure and mortgage crisis.

“(AB 2610) requires new owners of foreclosed property to respect legitimate leases — that way, renters are protected for the term of their lease,” said Assemblymember Nancy Skinner, D-Berkeley, author of the bill. “Under a month-to-month agreement, if the new owners try to get an eviction, you would at least have 90 days’ notice.”

Since 2009, Berkeley has seen lower rates of foreclosure and more stable property values than other parts of the state. Data collected by the Berkeley Rent Stabilization Board and the Berkeley Association of Realtors imply a gradual reduction in rates of foreclosures of rental properties since the height of the statewide foreclosure crisis.

Still, foreclosure can be confusing and chaotic for renters, leaving them uncertain about who should accept their rent and how to ensure the new property owner — which may be a bank or an out-of-state investor — fulfills the obligations of a landlord.

“There’s been lots of attention paid to owner-occupants, but close to 50 percent of California’s population are renters, not homeowners,” Skinner said. “We were aware that this invisible population was being affected.”

Rent Board Commissioner Igor Tregub said a property owner is required to show good cause for evictions in Berkeley, and foreclosure does not qualify as good cause. However, if a bank or investor legally evicts a landlord in financial difficulty, tenants run the risk of being summarily evicted unless they take steps to demonstrate that they live there.

“Banks just assume (landlords) are homeowners and file an eviction suit as if they are homeowners,” said Brendan Darrow, an attorney at the East Bay Community Law Center. “If no one appears in that lawsuit to defend it, the banks will win by default, and the sheriffs will evict anyone living there.”

Many people agree that information is the key to helping tenants keep their homes in foreclosed properties. The rent board sends notices to tenants informing them of their rights as soon as a rental property becomes “distressed,” or at risk of foreclosure.

“There are two things you can do as a tenant in a foreclosed property,” Darrow said. “First, you should notify the bank’s representative that you are a resident and provide as much information as you can about your tenancy. Second, pay your rent. If they won’t tell you where to pay your rent, save it until you find out where you can pay it.”

SB 1474, authored by state Senator Loni Hancock, D-Berkeley, creates a new special statewide grand jury to examine cases of widespread financial fraud with jurisdiction throughout the state. Currently, the authority of a grand jury is restricted to the county where it is impaneled, which makes it difficult and costly to prosecute wide-ranging fraud cases.

Heidi Abramson, the president of the Berkeley Association of Realtors, recalled the troubling foreclosure market and illegal evictions in Oakland during the height of the mortgage crisis.

“Basically, (new property owners) would come in and give (renters) a 30-day notice,” Abramson said. “Depending on the tenant, if they are a newly arrived immigrant, they would just move. They didn’t understand that they had any protections.”

Darrow emphasized the precarious position of a tenant in a foreclosed property, highlighting the importance of protections while elevated rates of foreclosures continue.

“It’s really important for these tenants to be protected from someone else’s mistake,” he said. “They’re not the borrower or the lender, and they bear all the cost if they’re forced out of their home.”

Contact Gautham Thomas at [email protected].