Rent Skimming Landlords Pocketing Gov't Rent Subsidies While In Foreclosure; Section 8 Tenants Forced Out Onto Street With Trampled Legal Rights

In Central Florida, WFTV-TV Channel 9 reports:

• A growing number of Central Florida's poorest residents are being forced out of their rental homes because their landlords aren't making the mortgage payments. Eyewitness News reporter Berndt Petersen found out that more and more Section 8 landlords are taking the federal rent payments while they default on the mortgages.

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• Stacey Kleinfeld runs Lake County's Section 8 Housing program, which helps lower income tenants pay their rent. However, a growing number of Section 8 landlords aren't paying their mortgages. "The federal government is being taken advantage of," Kleinfeld said. [...] Kleinfeld says some landlords are pocketing the federal rent money, sometimes more than $1,000 per month, while defaulting on the mortgages. Kleinfeld's office has had a tough time finding the landlords.(1)

For the story, see Landlords Accused Of Pocketing Rent Money.

(1) A federal foreclosure law signed this spring by President Barack Obama requires (with one exception not applicable here) property owners who come into land through foreclosure to honor all existing leases, and to provide a 90-day window for any month-to-month tenants. See Section 702(a)(2) of the Protecting Tenants at Foreclosure Act of 2009.

In addition, in the case of a tenant who receives a Section 8 federal rent subsidy (ie. a "Section 8" tenant), it has been reported that federal law prohibits a new owner, including foreclosure purchasers and foreclosing lenders, from evicting Section 8 tenants unless they first go to court and prove they’re being economically harmed by having a tenant remain in a building, or show other good cause. However, many Section 8 tenants panic and don’t fight eviction notices, not realizing they have these special rights granted by Federal law (and even if they are aware of their rights, they may be unable to find and/or afford legal representation competent on this legal issue). For more on this point, see Foreclosures hit tenants (Activists: New owners trample on renters’ rights).

For the specific federal regulation on this point, see 24 CFR 982.310(d)(1). Go here for the regulations (24 CFR 982) regulating the Section 8 rent subsidy program. RentSigmaSkimming