Foreclosure Crisis: Both Owners, Many Tenants to Be Homeless

In a January 16th New York Law Journal "Outside Counsel" feature, Legal Services NYC Chief of Litigation and Advocacy Raun Rasmussen writes that tenants as well as homeowners are becoming victims of the foreclosure crisis, losing essential services before foreclosure and their homes after the foreclosure is completed.

Fannie Mae's recent announcement ("Fannie Mae Lets Renters Stay Despite Foreclosures," New York Times, Dec. 15, 2008, B-1)1 that it will give tenants month-to-month leases post-foreclosure is a stark reminder of the plight facing thousands of tenants throughout New York City and the rest of the country.

Although it is common knowledge that homeowners who lose their buildings to foreclosure will lose their equity, their investment, and their homes if they lived in the buildings, tenants will also get evicted. The Furman Center for Real Estate and Urban Policy at New York University reported that in 2007, 15,000 foreclosure actions were commenced, involving buildings with more than 15,000 tenant households.2 Because foreclosure actions in New York typically take a year or more to complete, the current wave of foreclosures has only recently resulted in the judgments and sales that lead to eviction proceedings. The Daily News recently reported that a small wave of those proceedings has begun: 871 cases in Queens, 351 in Brooklyn, 195 in Staten Island, and 121 in the Bronx.3 Because Fannie Mae and Freddie Mac are involved in only about 60 of those (4 percent of the total), most of those tenants are likely to be evicted; thousands more are likely to follow.

Read the rest of the article on the New York Law Journal website (subscription required) or view a PDF by clicking here.