Of about 400 renters-facing-foreclosure cases Public Justice has handled, "I think the count is now at three as the number of situations where it seemed to us that there may have been some intent to sign a lease purely because the property is going into foreclosure. And we don't assist those people," Hill said. "If the sole purpose of the lease is to avoid the consequences of foreclosure, our opinion is it is not an arms-length transaction and thus not a bona fide lease."

Hill said he worries that if homeowners become last-minute landlords in large numbers, lawmakers would get rid of the protection for tenants. "And we don't want that to happen," he said. A sizable share of foreclosures proceedings in Baltimore affect honest-to-goodness renters because the properties are investor-owned.

When renters know their rights, the resolution is usually not a months-long wait for the lease to end but rather a cash-for-keys deal where they receive $2,000 to $4,000 to move out early, Hill added.

Here's the definition of "bona fide lease" from the federal law:

For purposes of this section, a lease or tenancy shall be considered bona fide only if—

(1) the mortgagor or the child, spouse, or parent of 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 or the unit's rent is reduced or subsidized due to a Federal, State, or local subsidy.

So an arms-length transaction is key. But Dowlut wasn't deflated by Hill's argument.

"Even if the bank does convince a court that it is not a bona fide lease, something that would be difficult barring an admission of guilt by either the home owner or the tenant, the home owner has still kept physical control of the house away from the bank for the time of the legal proceedings and has thus gained something," Dowlut wrote me.

Homeowners could easily put a for-rent ad on craigslist to show that the property was in fact marketed, he said, and it wouldn't be surprising that a homeowner in financial trouble would want to bring in rental income. 

He wonders how far this could be taken. "If you have a lease for the use of 1 bedroom at $400/mo, can that prevent the bank from taking physical possession of the house?"

There's a definite divide in public opinion these days when it comes to foreclosure, with some in favor of helping homeowners stay in their homes -- whether through loan modifications or other aid -- and others taking the stance that anyone who doesn't uphold their end of a contract (fair or otherwise) should get no assistance.

So I asked Dowlut why he felt so strongly about this possible leverage for borrowers.

"I understand the broader, big picture consequences of throwing a monkey wrench in the banks' quest to retake physical control of property," he answered. "It degrades the free market function of the housing market. But these are not normal times, and today's housing market is anything but free. Most public policy being enacted these days is for the purpose of redistributing wealth upwards, namely from the working class to the banker class. There is an extraordinary asymmetry of power and information when foreclosures happen. This idea ever so slightly helps to level a battle field that is very tilted in the banks' favor. The days of the Bailey Savings and Loan are gone. This is fighting Goliath National Bank by all available means." 

When Wall Street "is raking in record bonuses while people get thrown out on the street, such action is morally justifiable and should be used to the fullest extent possible," he added.

What do you think, folks?