subject: New Foreclosure Laws - Federal Changes [print this page] During this time of economic hardship, many new laws are being enforced to help people get out of debt and prevent foreclosure. Such laws are coming into play in the national landscape as well being localized on state levels. What the new federal foreclosure law states is that residents of homes that have been foreclosed have 90 days to vacate the premises without the necessity to make mortgage payments during that time. These rules became a federal law in May 2009 when President Obama signed the law named "Protecting Tenants at Foreclosure Act of 2009" into effect. This new law is most important for lenders and homeowners facing foreclosure to understand.
This law affects any mortgage loan that is federally related or is a loan on a residential property. Once a purchase has been made on a foreclosed home, the original tenant has 90 days to vacate. Every state is affected by this new law, so residents from California to New York now have an extended time to adjust their lives and make different living arrangements before being forced from their homes. This helps prevent families from being thrown into the streets without a roof over their heads, which is the reason behind the introduction of the law.
Different exceptions to the rule exist when contracts of a lease come into play. If there is a lease on the home, a bona fide tenant can remain in possession of the property for the remainder of the term. However, if the lease states that it is "terminable at will" according to state law, the tenant must still vacate within the 90 days. This is also the case if the purchaser of the property from an auction will use the premises as their primary place of residence. It is important to understand that these new foreclosure laws and provisions only have an effect on tenant-occupied residences, not mortgage-occupied properties.
The differences in laws on a state level are no more, now that this new statute has come into existence. The new foreclosure laws have a timeframe in which they will be effective. Since the country is facing an economic hardship that is expected to dissipate, the law will go out of effect at the end of 2012, allowing 2013 to begin as a fresh year returning to the old law. If the economy is not where it is projected to be at that point, the law may be revised and extended.
