This article continues Cre’s examination of the housing crisis on individuals caught in the maelstrom and potential regulatory responses, in this case turning her scrutiny to the innocent (i.e., not defaulting) renters living in properties undergoing foreclosure—a remarkably widespread phenomenon since estimates show that “nearly 40% of all foreclosures involve residential properties that are not occupied by the owners.” The article documents the widespread phenomenon of the eviction of renters by foreclosing mortgagees and the substantial social cost to the renters and their communities. In response, Congress enacted the Protecting Tenants at Foreclosure Act (“PTFA”) which gave renters statutory protection from eviction for 90 days or the remaining term of their lease, whichever is longer in most cases. Prior to the PTFA, whether the tenant could be evicted depended “on whether, under state law, the lease predated the mortgage or the tenant was joined as a defendant in the foreclosure proceedings.”

While approving the PTFA as better than nothing, and urging that it be renewed beyond its 2012 sunset provision, the article identifies some significant shortcomings, both by observing the PTFA in practice and by comparing it to more robust regulations in some states. In particular, Cre argues for a robust notice of rights provision, contending that many renters give up their PTFA rights out of complete ignorance. In addition to describing a variety of avenues to better notice and understanding, the article urges more substantive rights as well. In particular, drawing on her review of the experience of evicted tenants, Cre urges that for month-to-month renters, who are thereby limited to 90 days under the PTFA, the PTFA should remove the obligation to pay rent during that period, because the 90 days leaves such tenants “so little time to save enough money to secure alternative housing.”

One very significant aspect of the subprime mortgage meltdown and the housing mess that ensued has been skyrocketing rates of home abandonments resulting from foreclosures or threatened foreclosures. The abandoned homes reduce the value of surrounding properties and often become public nuisances, with dire financial consequences for the local government which often bears direct costs associated with clean up and indirect costs of tax loss associated with the decline in housing values. In this comprehensive article, Johnson takes a very close look at the details of this relatively untold story of the housing crisis and analyzes the legal responses.

The article explains and tracks the employment of traditional approaches (nuisance abatement actions, tax foreclosures, and in rem criminal proceedings), demonstrating that, while useful and potentially effective on a case-by-case method, the resources and, especially, the length of time, such proceedings take have made them inadequate to the task of coping with the current flood of abandonments. Johnson well-captures this theme in her introduction to the detailed explanation where she tells her reader to “note the reoccurring verbal references: identifying, notifying, waiting, ordering, taking and foreclosing.” The article next provides a detailed analysis of three cities’ distinct attempts to overcome this problem with large-scale litigation that tries to hold lenders responsible for many properties via a single law suit (Baltimore under the Fair Housing Act, Cleveland under a state-law mass public nuisance claim citing subprime lending as the proximate cause, and Buffalo under a nuisance suit citing, more traditionally, the lenders’ ownership as the proximate cause of the nuisance).

In a final section, the article examines the legislative response to this problem. The analysis includes an explanation of the manner in which the securitization of mortgages rendered obsolete long-held assumptions about lender behavior with regard to abandonment issues, a close study of expected effects of federal legislation passed in 2008, and recommendations regarding revised nuisance laws at the local level.

This substantial article covers contemporary lending practices targeted at minority communities, their dangers and effects, the means of marketing them, and the current litigation and regulatory status of such practices. The article endorses creation of a Consumer Financial Protection Agency (“CFPA”) and analyzes the strengths and weaknesses of the version of such an agency contained in the financial reform bill passed by the U.S. House of Representatives in December 2009. While giving special attention to subprime mortgages, the article also covers interest-rate markups on car loans, tax-refund loans which undermine the earned income tax credit, and payday loans under the predatory lending rubric. Cre describes the use of minority celebrities, churches, events, and owners as means of marketing these products in communities of color. In addition to documenting the success of such techniques and the psychology that underlies it, the article analyzes the (somewhat limited) litigation record in this area. Lawsuits claiming discrimination (as opposed to consumer protection violations) have been limited to mortgage lending (typically under the Fair Housing Act), and plaintiff’s have had some limited success in efforts to establish disparate impact and even intentional discrimination. In preference to litigation, Cre joins Elizabeth Warren’s call for the creation of a CFPA and discusses proposals to do so.

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