No Foreclosure Relief for Renters

by Shannon Moriarty

Published October 27, 2008 @ 01:09PM PT

In recent months, we have watched the real estate bubble burst, a $750 billion dollar bailout of Wall Street, and thousands of homeowners lose their properties to foreclosure. Now, many are pushing for aid to help homeowners stay in their homes.

So what's missing from this conversation around the national kitchen table?

Renters. 

With all the talk of housing in our sour economy, renters have largely flown under the radar. Yet, far too often renters are the displaced victims of foreclosure. According to the Houston Chronicle:

Almost 15 million renters, or 40 percent of all renters, live in single-family homes, townhouses, condos or duplexes, according to Census data. While there are no national figures on foreclosure-related evictions, these types of rental properties have been vulnerable to foreclosure because they tend to be owned by small investors.

According to RealtyTrac, about one-third of the 378,250 properties with valid mailing addresses that were in default or waiting for a foreclosure sale in May were not occupied by the owner. That would indicate they are investment properties or rentals.

Laws protecting tenant's rights vary state to state, but most do not require a minimum notice prior to enforcing foreclosure evictions. As a result, renters often receive little or no notice that their property owner has defaulted before they are forced to leave. Only a few states- like California, Ohio, and Illinois - require 30 to 90 days minimum notification. Other states - Indiana, Minnesota, Rhode Island and Washington - considered bills that would have required minimum notification for tenants in foreclosures, but they apparently died in their legislatures, according to the National Conference of State Legislatures.

This is simply unacceptable. In a rough economy, many renters will not have the resources to rebound from losing their homes. Many will struggle to keep afloat in a sinking economy. Many others will become homeless.

Of course, ignoring the problems and needs of our nation's renters is not a new phenomenon. For over a century, Washington has been giving renters the cold shoulder. The Concord Monitor of New Hampshire offered excellent insight into our nation's long federal policy preferences for homeowners:

Congress must recognize that for some people, renting rather than owning is the right choice, and for many, it's the only option. Though housing prices have fallen, rents driven up by a shortage of affordable housing remain high. Current plans to restart the economy do not recognize that reality.

Tax policies allow homeowners to deduct the interest they pay on their mortgage - a huge taxpayer subsidy - and even to deduct the interest paid on loans used to buy large boats and recreational vehicles. But the IRS does not give a similar break to renters as they work to keep a roof over their heads.

At least a decade ago, federal housing policy turned away from subsidizing the construction of affordable housing and giving Section 8 housing allowances to the poor in favor of ever greater subsidies to increase home ownership. In 2006, three-quarters of the nation's $199 billion in housing subsidies targeted homeowners: less than one-quarter benefited renters. The wait for space in Section 8 housing remains years long. That must change. Congress shouldn't continue to give greater subsidies to the more, rather than the less, affluent.

Clearly, our nation's housing goals have been misguided. When we can hardly say our current bailout plan benefits homeowners, at least they are being included in the conversation. Renters need relief... and fast.