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A portrait of the servicer as a landlord.

Article Excerpt
On May 20, President Obama signed the Helping Families Save Their Homes Act of 2009. Title VII of the new law provides protections to tenants from eviction as a result of foreclosure on the properties they are renting. These provisions took effect on May 20 and will expire on Dec. 30, 2012.

With widespread confusion surrounding the implications and reach of this statute, some clarification is in order to ensure compliance by all involved parties.

The tenant-protection provisions apply in the case of any foreclosure on a "federally related mortgage loan" or on any dwelling or residential real property. They provide that "any immediate successor in interest" in such a foreclosed property, including a bank that takes title to a house after foreclosure, will assume the interest subject to the rights of any bona fide tenant and certain notice requirements.

A look at the current REO supply ... with more to come

Mortgage delinquency is up 65 percent from a year ago, according to figures released in August by TransUnion LLC, Chicago. With prime fixed-rate loans and Federal Housing Administration (FHA) loans set to outpace subprime adjustable-rate mortgage (ARM) loans in terms of new foreclosures, the Helping Families Save Their Homes Act provides some encouraging news for borrowers occupying real estate-owned (REO) rental properties, but has onerous implications for servicers managing those properties.

According to REOMAC, Sacramento, California, as of Aug. 31, there were 461,368 REO properties nationwide. There seems to be little understanding within the industry...

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