To protect the interests of bona fide tenants in the case of any foreclosure on any dwelling or residential real property, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Protecting Tenants at Foreclosure 
Act of 2009''.

SEC. 2. EFFECT OF FORECLOSURE ON EXISTING TENANCY.

    (a) In General.--In the case of any foreclosure on any dwelling or 
residential real property, any immediate successor in interest in such 
property pursuant to the foreclosure shall assume such interest subject 
to--
            (1) the provision, by such successor in interest, of a 
        notice to vacate to any bona fide tenant at least 90 days 
        before the effective date of such notice; and
            (2) the rights of any bona fide tenant, as of the date of 
        such notice of foreclosure--
                    (A) under any bona fide lease entered into before 
                the notice of foreclosure to occupy the premises until 
                the end of the remaining term of the lease, except that 
                a successor in interest may terminate a lease effective 
                on the date of sale of the unit to a purchaser who will 
                occupy the unit as a primary residence, subject to the 
                receipt by the tenant of the 90 day notice under 
                paragraph (1); or
                    (B) without a lease or with a lease terminable at 
                will under State law, subject to the receipt by the 
                tenant of the 90 day notice under subsection (1),
        except that nothing under this section shall affect the 
        requirements for termination of any Federal- or State-
        subsidized tenancy or of any State or local law that provides 
        longer time periods or other additional protections for 
        tenants.
    (b) Bona Fide Lease or Tenancy.--For purposes of this section, a 
lease or tenancy shall be considered bona fide only if--
            (1) the mortgagor under the contract is not the tenant;
            (2) the lease or tenancy was the result of an arms-length 
        transaction; and
            (3) the lease or tenancy requires the receipt of rent that 
        is not substantially less than fair market rent for the 
        property.

SEC. 3. EFFECT OF FORECLOSURE ON SECTION 8 TENANCIES.

    Paragraph (7) of section 8(o) of the United States Housing Act of 
1937 (42 U.S.C. 1437f(o)(7)) is amended--
            (1) in subparagraph (C), by inserting before the semicolon 
        at the end the following: ``, and in the case of an owner who 
        is an immediate successor in interest pursuant to foreclosure--
                            ``(i) during the initial term of the 
                        tenant's lease having the property vacant prior 
                        to sale shall not constitute good cause; and
                            ``(ii) in subsequent lease terms, having 
                        the property vacant prior to sale may 
                        constitute good cause if the property is 
                        unmarketable while occupied, or if such owner 
                        will occupy the unit as a primary residence'';
            (2) in subparagraph (E), by striking ``and'' at the end;
            (3) by redesignating subparagraph (F) as subparagraph (G); 
        and
            (4) by inserting after subparagraph (E) the following:
                    ``(F) shall provide that in the case of any 
                foreclosure on any residential real property in which a 
                recipient of assistance under this subsection resides, 
                the immediate successor in interest in such property 
                pursuant to the foreclosure shall assume such interest 
                subject to the lease between the prior owner and the 
                tenant and to the housing assistance payments contract 
                between the prior owner and the public housing agency 
                for the occupied unit; if a public housing agency is 
                unable to make payments under the contract to the 
                immediate successor in interest after foreclosure, due 
                to action or inaction by the successor in interest, 
                including the rejection of payments or the failure of 
                the successor to maintain the unit in compliance with 
                paragraph (8) or an inability to identify the 
                successor, the agency may use funds that would have 
                been used to pay the rental amount on behalf of the 
                family--
                            ``(i) to pay for utilities that are the 
                        responsibility of the owner under the lease or 
                        applicable law, after taking reasonable steps 
                        to notify the owner that it intends to make 
                        payments to a utility provider in lieu of 
                        payments to the owner, except prior 
                        notification shall not be required in any case 
                        in which the unit will be or has been rendered 
                        uninhabitable due to the termination or threat 
                        of termination of service, in which case the 
                        public housing agency shall notify the owner 
                        within a reasonable time after making such 
                        payment; or
                            ``(ii) for the family's reasonable moving 
                        costs, including security deposit costs;
                except that this subparagraph and the provisions 
                related to foreclosure in subparagraph (C) shall not 
                affect any State or local law that provides longer time 
                periods or other additional protections for tenants.''.

Summary: Protecting Tenants at Foreclosure Act of 2009 - States that any immediate successor in interest to residential property in foreclosure assumes such interest subject to: (1) giving an existing tenant at least 90-day notice to vacate; and (2) specified rights of such tenant to occupy the premises until the end of the lease.

Amends the United States Housing Act of 1937 to require a housing assistance payment contract to provide that in the case of an owner who is an immediate successor in interest pursuant to foreclosure: (1) during the initial term of the lease vacating the property prior to sale shall not constitute other good cause for termination of the lease; but (2) in subsequent lease terms vacating the property prior to sale may constitute good cause if the property is unmarketable while occupied, or if such owner will occupy the unit as a primary residence.

Authorizes: (1) a housing assistance payment contract entered into by the public housing agency and the owner of a dwelling unit to provide that the immediate successor in interest to property in foreclosure in which a housing assistance recipient resides assumes such interest subject to the lease between the prior owner and the tenant, and subject to the housing assistance payments contract between the prior owner and the public housing agency for the occupied unit; and (2) the public housing agency, where the successor owner cannot be identified, to use rental funds to pay for the property's utilities if owed by the owner or for reasonable moving costs, including security deposits.