Tag Archives: foreclosure

Dwyane Wade in Foreclosure?

2007 ESPY Awards - ArrivalsCould Dwyane Wade, worth approximately $100 million, really be in foreclosure? According to recent news reports, yes.  You may be thinking: What? Sure we hear about millionaire celebrities who live extravagant lifestyles only to end up in bankruptcy or lose a $25 million dollar home to foreclosure. But Wade is still making $30 million a year and the home in question is worth only $1.2 million (a pretty modest price tag for his income level).

So what gives?  Read a bit further into the story and you’ll get the explanation, which can be collapsed into one word — divorce. Wade’s situation is a lesson to anyone deciding what to do with the family home during divorce. Luckily for wealthy Wade, this situation is probably little more than a public relations fiasco for him. For the rest of us mortals who might be in a similar situation, it is a big deal and can be financially devastating.

Wade’s Property Settlement in His Divorce

Wade and his ex-wife, Siohvaughn Funchesreached a property settlement in their divorce last summer. She got the house in New Holland, Illinois. According to TMZ, Wade’s name was removed from the title to the home. But it sounds like his name is still on the home loan documents.

This is not unusual. When a home is awarded to one party in a divorce, it’s a fairly simple matter to drop one spouse’s name off the title to the home. Not so for the loan documents. Usually, the divorce judgment or settlement will state that the spouse who gets the home is solely responsible for making the mortgage payments. Even so, the parties cannot drop one spouse’s name from the loan documents. It’s up to the bank to do that. Because the bank has no incentive to remove one party’s responsibility for paying the mortgage, it rarely (if ever) does. Think about it. Why would the bank agree to give Wade a free pass on his liability for the home loan? He’s the one with the big bucks.

Wade’s Beef Is With His Ex, Not the Bank

According to the news reports, Funches stopped making the mortgage payments on the $1.2 million dollar home. She is now in default to the tune of $225,000. The bank started foreclosure proceedings against Wade and Funches.  But because Wade is still on the loan documents (this blog assumes that he is; it’s possible, but unlikely, that he’s not), his gripe is against Funches, not the bank.

His remedy is to go after Funches for any damages he sustains.  If Wade’s settlement agreement was like most, it probably has an indemnification clause in which Funches agrees to pay for any damages resulting from foreclosure or similar actions. If it does, Wade can bypass  a few steps before he tries to collect against Funches.

And what damages might Wade incur?

Wade Might Be on the Hook for a Deficiency After the Foreclosure

I’m sure Wade could care less that his ex-wife can no longer live in the home. But should he worry that the bank can get a judgment for a deficiency in the foreclosure action?  It depends on how much equity is in the home.

If you lose your home to foreclosure in Illinois, the lender can also get a deficiency as part of the foreclosure judgment. (Learn more in Deficiency Judgments After Foreclosure in Illinois.)  A deficiency is the difference between the unpaid loan balance and the amount the home sells for at the foreclosure sale. If your home is underwater, you’ll owe a deficiency. If you have lots of equity in the home (more than the unpaid loan balance), then you’ll be safe. (This is true in many other states. To learn about your state’s deficiency after foreclosure law, see Deficiency After Foreclosure in Your State.)

Example. The home sells for $200,000. You still owed $250,000 on the mortgage. The deficiency is $50,000.

So, if the unpaid balance on Wade’s mortgage is more than the equity in the home, the bank can get a deficiency judgment against him and Funches. Once the bank has the judgment, it can use various collection measures to get the money if Wade doesn’t voluntarily pay up. But let’s be honest. If Wade ends up owing even the full $225,000 (or a bit more once you wrap in foreclosure costs and attorney’s fees), that’s a drop in the bucket for him.

If Wade goes after Funches to recover any amounts he pays, he probably can’t touch the $25,000 she gets from him in support, but if there’s anything left of the $5 million settlement, he might be able to get that.

What About Wade’s Credit?

Having a foreclosure on your credit report is never a good thing. In Wade’s case, however, I doubt this foreclosure is going to affect his ability to get credit or take out loans in the future. Plus, since he’s worth $100 million, I’m not sure he needs credit like the rest of us do.

The Lesson for the Rest of Us

Unfortunately, this scenario is not unique to celebrities and their ex-spouses.  And unlike Dwyane Wade, most people that end up in his situation don’t have $100 million lying around to stave off a foreclosure or pay off a deficiency judgment.

So what does that mean?  If your ex defaults on the mortgage in the home that she or he is living in, you will be named in the foreclosure action. That means it goes on your credit report and if there’s a deficiency judgment, you’ll be on the hook for that too.  You can go after your ex to reimburse you for any amounts you pay (or any amount that get taken by the bank from your wages or bank account). But whether your ex has anything you can collect against is another matter.

How to Avoid this Situation?

One way to avoid this nightmare is to require that your spouse, as part of the divorce agreement, refinance the loan under his or her name only. Unfortunately though, because divorce and financial stress go hand in hand, often divorcing parties aren’t able to qualify for a new home loan on their own.

Another simple option is to sell the home. The parties divide up the debt and/or equity however they agree, and walk away.

The bottom line when it comes to divvying up the family home: Make sure you understand all of the eventual consequences if your spouse stops paying the mortgage. (To get informed about your options, see Divorce and the Family Home.)

Maryland Banks Have 3 Years to Sue Foreclosed Homeowners, Not 12

Lady justice on top of a snailThe Maryland legislature just significantly shortened the time period in which banks can sue foreclosed homeowners for a deficiency. Under a loophole in the old law, banks often had 12 years to pursue foreclosure homeowners for unpaid mortgage debt. Starting July 1, 2014, they’ll  have to do it within three years.

What Is a Deficiency After Foreclosure?

If you lose your home through foreclosure in Maryland, it’s very possible that the foreclosure sale proceeds won’t be sufficient to cover the mortgage debt owed.

Example. Say your home, in the current market, is worth $200,000. But when you bought it ten years ago, it was worth much more. You still owe $250,000 to your mortgage lender. If the home is sold after foreclosure, and the price fetched is $200,000, you’ll still owe the lender $50,000 in mortgage debt. This is called a deficiency.

Some states don’t allow mortgage lenders to go after foreclosed homeowners for a deficiency. But in Maryland, the lender can sue you for a deficiency. Learn more about deficiency judgments after foreclosure in Maryland.

Statute of Limitations for Deficiency Actions in Maryland

The statute of limitations is the time period in which you must bring a lawsuit. If you don’t sue within the statute of limitations, you are barred from suing in the future.

Maryland has a specific statute of limitations law that applies to deficiency judgments after foreclosure. Under that law, the bank has three years from the foreclosure to file a lawsuit to collect the deficiency. But there’s a loophole in another part of Maryland’s statutes. A different law states that a creditor can pursue a deficiency based on a promissory note as long as it does so within 12 years.

The Maryland legislature sealed that loophole. The new law, which will become effective on July 1, 2014, specifically states that the 12-year statute of limitations for promissory notes does not apply to a deficiency based on a deed of trust, mortgage, or promissory note for a residential home. The three-year statute of limitations, therefore, will apply.

Use It or Lose It: The Automatic Stay in a Third Bankruptcy Case

1_2_3ASK LEON 

Bankruptcy expert Leon Bayer answers real-life questions.

Dear Leon, 

I need to file a bankruptcy case to stop the foreclosure of my home. But there’s a catch. I already filed two Chapter 13 bankruptcy cases in the past ten months and both were dismissed. The first because of some bad advice I got. The second because I

found out too late that I needed to file a motion to continue the protection of the automatic stay within 30 days. 

The foreclosure is back on track and I need to stop it so that I can save my home. I’m handling the bankruptcy on my own.

So here’s my question. Since I didn’t use up my right to file a motion to continue the stay in the second bankruptcy, can I file another Chapter 13 case and also file the motion? It seems to me that my right to file the motion is preserved because I haven’t exercised it yet. 

Sincerely,

Grace

Dear Grace,

You don’t preserve your right to ask the court to continue the automatic stay by not using it. It’s a “use it or lose it” right during bankruptcy case number two. However, you may be able to get the court to impose a stay as to your lender in the third bankruptcy. Whether this will work depends on how much time you have before your home is foreclosed.

Here’s a bit more about repeat bankruptcy filings and the automatic stay.

The Automatic Stay in Your First Bankruptcy Case

As you correctly understand, only the filing of your first bankruptcy case created an automatic stay. Under the automatic stay, most creditors must stop collection activities during your bankruptcy. That automatic stay encompasses foreclosures – so your lender had to stop the foreclosure proceedings when you filed the first case. (To learn more, see Nolo’s article Bankruptcy’s Automatic Stay.)

The Automatic Stay in Your Second Bankruptcy Case

If you file a second bankruptcy case within one year from the filing of the first, the automatic stay only lasts 30 days. The court can extend the 30 days, but you have to file a motion asking the court to do so. In order to get the extension, you have to convince the court that you filed your second case in good faith as to creditors you are trying to encompass under the extension.

The court will only grant such an order during the first 30 days of case number two. This doesn’t leave you much time (as you found out). Experienced bankruptcy lawyers normally file an emergency motion to extend the stay on the same day as the second case is filed. Doing that provides the best chance of having the court consider the motion before expiration of the deadline.

The Automatic Stay in Your Third Bankruptcy Case

If you file for bankruptcy a third time within one year, the automatic stay doesn’t kick in at all. You can, however, ask the court to impose the automatic stay. Again, you’ll have to do this by motion and you’ll only have 30 days to get the order.

If you haven’t yet filed your third bankruptcy case, consider talking to a bankruptcy lawyer. An experienced lawyer may be able to file the motion requesting the automatic stay along with your bankruptcy case, and get the motion heard before 30 days have passed.  You’ll have to convince the court that you haven’t filed your third case in bad faith. (Learn more about the automatic stay in repeat bankruptcy filings.)

Whether this strategy will work depends on when the foreclosure sale is scheduled.  If the sale is scheduled to take place in less than 30 days, you’ll be out of luck.

-Leon

Leon Bayer is a Los Angeles bankruptcy attorney.  He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy.  The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo.  By answering a question on this blog, Mr. Bayer does not become your lawyer.

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January Rings in New Federal Laws Protecting Homeowners

ring in the new yearIn early January, a number of new federal rules in the foreclosure and mortgage context became effective. The changes came out of the Dodd–Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) which provided authority to the Consumer Financial Protection Bureau (CFPB) to issue rules to implement the changes. The changes were many; below are just a few of the highlights.

No Dual Tracking

In recent years, dual tracking was a frequent practice among many mortgage lenders and servicers. With dual tracking, a bank would consider a homeowner’s application for a loan modification while simultaneously continuing to foreclose on the homeowner’s home.

A number of states passed laws prohibiting this practice in 2013, and the signatories to the National Mortgage Settlement agreed to stop this practice as well. But even better, as of January 10, 2014, federal law prohibits dual tracking. For details on the new rule, see New Laws Prohibiting Dual Tracking in the Foreclosure Context.

Ability to Pay Standards for Mortgages

In the 2000s, mortgage lenders often approved loans without running numbers or inquiring into whether the homeowner could actually afford the mortgage. Lenders signed people up for mortgages with “teaser rates” that later increased dramatically or low rate loans that had a large balloon payments after a few years. The homeowner would inevitably default and lose the home through foreclosure.

The new CFPB rules, which became effective January 10, 2014, require mortgage lenders to consider specific factors and make a good faith determination that the borrower has an ability to repay the loan. The “ability to repay” (ATR) requirements apply to almost all closed-end residential mortgage loans. (A closed-end loan is one that must be repaid by a certain date. Most mortgages are closed-end loans.) However, there are a number of loan types that are exempt from these requirements. For details on what the lenders must do under the new rule, and which loans it does and does not apply to, see New Mortgage Rules on Ability to Pay.

More Protections for Borrowers of High-Cost Home Loans

The Home Ownership and Equity Protection Act (HOEPA) provides protections to borrowers taking out certain types of loans with high interest rates or high fees. The Dodd-Frank Act expanded those protections and the CFPB’s rules implementing those changes became effective on January 10, 2014.

Among other things, the new rules:

  • require lenders offering high cost loans to provide more disclosures to borrowers
  • prohibit lenders from including certain types of onerous loan terms in the loans, like balloon payments, and
  • restricts fees that lenders can charge for these loans.

For details on which loans the new CFPB rule applies to, and what is required and prohibited, see New Protections for High-Cost Mortgages.

Other Mortgage Servicer Requirements

The CFPB implemented a whole host of other rules that protect mortgage holders, people shopping for mortgages, and those facing foreclosure. These new rules require mortgage servicers to:

  • provide monthly billing statements to borrowers (there are exceptions for some types of loans) that include specific information
  • notify borrowers when the interest rate changes on adjustable interest rate loans
  • promptly credit mortgage payments
  • provide alternatives to force placed insurance
  • quickly resolve errors and respond to borrowers’ information requests, and
  • contact any borrower who falls behind in payments.

To get details on these new rules, see Federal Rules Protecting Homeowners With Mortgages.

Filing Bankruptcy on the Eve of a Foreclosure Sale

Bankruptcy_Petition_iStock_000008359066XSmallASK LEON 

Bankruptcy expert Leon Bayer answers real-life questions.

Dear Leon, 

I filed a Chapter 13 bankruptcy petition yesterday, late in the afternoon. I filed in California on my own, without an attorney. A foreclosure sale is set for tomorrow. After I got my bankruptcy case number I tried to contact the parties involved in the foreclosure to give them notice of my bankruptcy filing. I couldn’t reach anyone in the lender’s foreclosure office, nor can I find an email address or a fax number to notify anyone to stop the foreclosure. What should I do? 

Trista  

Dear Trista,

If you act quickly, you might be able to prevent the sale from going through. Even if the sale occurs, it’s possible you can void it (but it won’t be easy). Here’s what to do.

(Learn how Chapter 13 bankruptcy can help you save your home from foreclosure.)

Go to the Foreclosure Sale

You should attend the actual foreclosure sale, or send a reliable person to the sale. Get there early and provide proof of the bankruptcy filing to the auctioneer before the sale starts.

If You Can’t Attend, Record a Bankruptcy Notice

If you can’t attend the foreclosure sale, immediately record a Notice of Bankruptcy in the county recorder’s office. Do this in the county where the real estate is located.

Will the Bankruptcy Stop the Foreclosure?

The filing of a bankruptcy (assuming there are no prior bankruptcy filings), creates an automatic stay which prohibits most collection efforts, including a foreclosure. Courts have held that a foreclosure sale is void or voidable, when done in violation of the automatic stay. (Learn more about how the automatic stay stops foreclosure.)

Even so, it can get awfully tricky. Doubly so if the sale is conducted and the property gets purchased by an innocent buyer – what we lawyers call a BFP (“bona fide purchaser for value”).

There is at least one key court decision stating that the foreclosure sale is still voidable even if the property is bought by a BFP. However, it can be a litigation mess for a debtor who is trying to get a foreclosure sale rescinded. (In fact, I was the lawyer for the successful homeowner in that case. See Walker v. California Mortgage Service, 861 F.2d 597.)

If the Sale Has Occurred: Record the Bankruptcy Notice Before the Recordation of the Trustee’s Deed

Even if the sale has already been held, it is very helpful to record a bankruptcy notice before a trustee’s deed is recorded. The trustee’s deed upon sale is typically not issued to the successful bidder until a few days after the sale.

The recorded notice imposes what we lawyers call “constructive notice” upon all the parties involved. Constructive notice of the sale should remove any defenses that a BFP would raise if you have to bring a legal action seeking to void the sale.

Of course, you should continue efforts to notify the lenders and the foreclosure agents.

– Leon

Leon Bayer is a Los Angeles bankruptcy attorney.  He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy.  The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo.  By answering a question on this blog, Mr. Bayer does not become your lawyer.

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My spouse is the only borrower on our reverse mortgage. If he dies, will I lose the home?

Question

I have a reverse mortgage with my spouse, but I am not on the loan documents. If my spouse dies, will I lose the home?

Answer

In the past, the answer would be – probably. But because of a new court decision, that may be changing.

Foreclosure of Reverse Mortgages When Borrower-Spouse Dies

It is not uncommon for only one spouse to be a signatory on a reverse mortgage. Brokers sometimes advise couples to leave the younger spouse off the reverse mortgage so that they couple can borrow more money. Often, the broker tells the couple that structuring the documents this way won’t affect the non-borrower spouse’s right to live in the home. But in the past, this was often not true. Many times, when the spouse on the mortgage died, the holder of the reverse mortgage would demand full payment of the reverse mortgage — and if the spouse could not repay the entire loan (which was often the case), he or she would then face foreclose.  (Learn more about foreclosure of reverse mortgages.)

Bennett v. Donovan

In Bennett et al. v. Donovan, 2013 WL 5442154 (D.D.C. Sept. 30, 2013), the United States District Court for the District of Columbia ruled that a Housing and Urban Department (HUD) regulation that allows lenders to demand that surviving spouses immediately repay reverse mortgage loans upon the death of their spouses violates federal law. The court remanded the case to HUD to fix the problem in accordance with the court’s decision. It remains to be seen exactly how HUD will fix the problem, but it may led to regulatory changes.

To learn more about this case, including the factual background and the reasoning behind the decision, see Nolo’s article New Rule: Spouses Not Named on Reverse Mortgages Are Protected From Foreclosure.

 

Big Banks Find a Way Around the National Mortgage Settlement

Bank SignThe National Mortgage Settlement was supposed to hold five major banks (Ally, Bank of America, Citi, JPMorgan Chase, and Wells Fargo) accountable for the servicing violations that contributed to the foreclosure crisis in this county. (Learn more in Nolo’s article National Mortgage Settlement: Can You Benefit?)

However, not only has servicing misconduct continued to occur (see Nolo’s article Making Sure Banks Comply With the National Mortgage Settlement), but the banks have found a way to avoid complying with the settlement altogether –- by selling off their servicing rights.

What is a Mortgage Servicer?

Mortgage servicers collect and process payments, as well as handle foreclosures when borrowers can’t make their payments. The five banks that are part of the National Mortgage Settlement are the country’s five largest mortgage servicers.

Servicing Reforms Under the National Mortgage Settlement

The National Mortgage Settlement mandated specific standards for mortgage servicers to follow, like prohibiting dual tracking (when a mortgage holder continues to foreclose on a homeowner’s home while simultaneously considering the homeowner’s application for a loan modification) and providing a single point of contact for borrowers in the loss mitigation process. (Learn more about the servicing requirements that the banks must follow when servicing loans and dealing with homeowners in foreclosure in Nolo’s article National Mortgage Settlement: New Rules Help Protect Homeowners in Foreclosure.)

Banks Selling Off Servicing Rights to Avoid Settlement Obligations

It seems that these banks have come up a way to avoid the obligations imposed by the settlement: by selling the mortgage-servicing rights to servicing firms like Green Tree, Nationstar, and Ocwen. By selling the servicing rights, the banks can bypass the settlement standards, along with the costs and efforts associated with ensuring compliance with them.

What This Means for You

This means that if you were counting on the National Mortgage Settlement to ensure you receive fair, honest treatment from your bank during the foreclosure or loss mitigation process, instead you may have to deal with a company that is not bound by the terms of that settlement.

The good news is the new servicing rules imposed by the Consumer Financial Protection Bureau (which are similar to the rules mandated by the National Mortgage Settlement) apply to all servicers, not just big banks. Those rules go into effect on January 10, 2014. And a few states, like California, have enacted legislation with reforms similar to those in the National Mortgage Settlement that apply to all mortgage servicers as well. (Learn more in Nolo’s articles New Federal Rules Protecting Homeowners With Mortgages and New Laws Prohibiting Dual Tracking in the Foreclosure Context.)

by Guest Blogger & Nolo Contributing Editor Amy Loftsgordon

Halloween Fright: Vampire and Zombie Foreclosures

halloween pumpkinWhat do foreclosures have in common with Halloween?  Two words — zombies and vampires.

Zombie foreclosures and vampire foreclosures are recent trends in the foreclosure landscape. They are appropriately named because foreclosures are always scary, and particularly so in these situations. (Zombie foreclosures are scary for homeowners and vampire foreclosures are scary for the economy).

Zombie Foreclosures

If you are a homeowner facing foreclosure, you could be haunted by a zombie foreclosure. How? You receive a foreclosure notice from the bank (perhaps it’s a Notice of Default, Notice of Foreclosure Sale, or some other notice that the mortgage servicer provides to initiate a foreclosure or move it down the line), decide to walk away from your home, pack up, and leave – assuming the foreclosure will go through.

But here’s the catch: Sometimes the bank won’t complete the foreclosure, or at least not right away. (To learn why this happens, see Nolo’s article Zombie Foreclosures.) While your home is in limbo, you remain the legal owner. This means you are on the hook for property taxes, HOA dues, and maintenance on the property. Homeowners that get haunted by zombie foreclosures are often shocked when months or years later they:

  • are sued for unpaid property taxes or HOA assessments, or
  • get bills or face fines for violating housing codes and ordinances as the home and property fall into disrepair or get vandalized.

Needless to say, these additional unpaid and delinquent debts don’t help your efforts to rebuild your credit after the foreclosure.

How to Avoid a Zombie Foreclosure

The best defense to a zombie foreclosure? Stay put until the foreclosure sale has occurred and you receive a notice to vacate. It’s also a good idea to confirm that title to the home has actually been transferred to the bank. You can do this by checking with the local county recorder’s office or website.

Vampire Foreclosures

Vampire foreclosures are not scary for former homeowners, but some experts are worried that too many of them will haunt the economy.

In a vampire foreclosure, although the foreclosure is completed, the bank doesn’t force the homeowner leave, so he or she stays on, living in the home. This can actually be a good thing for neighborhoods – the property is not vacant so it’s not a target for vandalism and the ex-homeowner takes care of the home (taking out the trash, maintaining the lawn, repairing broken gates, replacing front porch lights) which reduces community blight. And it can be good for the ex-homeowner too, allowing him or her to save up money to use for a security deposit on a rental home, pay down other debts, or otherwise improve his or her financial situation.

But some economists worry that keeping these houses off the market creates an artificially low inventory, which could inflate housing prices. Then, when all of these homes do hit the housing market , the increased inventory could deflate home prices. (To learn more, see Nolo’s article on Vampire Foreclosures.)

I Want to Buy a Condo as a Short Sale but the HOA Just Foreclosed

Short SaleASK LEON 

Bankruptcy expert Leon Bayer answers real-life questions. 

Don’t Come Up Short on a Short Sale 

Dear Leon, 

I’m a beginning property investor. I have been negotiating to purchase a condo as a short sale. The condo is worth $500,000 and owner still owes $1 million on the mortgage. We got short sale approval from the lender, but the homeowner’s association just held a foreclose sale and now owns the condo. The HOA is in the process of evicting the former owner. 

I still want the property. Should I contact the HOA and try to buy the property from it or ask it to stop the eviction so I can finish the short sale? 

Thanks, 

Justin 

Dear Justin,

There is dirty work that needs to be done here. I would back off just a bit and let the HOA do it for you.

If you buy the condo right now, you will be stuck evicting the former owner. Why not let the HOA do it? Rather than delay the eviction, let it go full speed ahead at the HOA’s expense.

What you can do right now is negotiate with the HOA to buy the property. As things stand, the HOA owns this property subject to that million dollar mortgage. One of two things will happen.

  • the HOA will do a short sale, or
  • the mortgage lender will foreclose on the HOA.

If the lender is still willing to go forward with a short sale, then you can buy the unit from the HOA. If the lender forecloses, you can negotiate to buy it from the lender as an REO. (Learn more about REO properties and how to purchase them.)

In addition to conditions you would require for any condo purchase, you should also require that the unit be vacant, that it be subject to your approval on a final walk through inspection,  that the lender agrees to the short sale, and that the time period in which the former owner can redeem the property has expired. The last thing you want is to buy a damaged property with the ex-owner still living in it, or else buy the property, improve it, and then have the ex-owner try to reclaim it.

I hope it works out for you. As investments go, these short sale deals often come up short.

Leon Bayer is a Los Angeles bankruptcy attorney.  He is a partner at Bayer, Wishman & Leotta, a California law firm specializing in bankruptcy.  The opinions and advice in this blog post are from Mr. Bayer alone, and should not be attributed to Nolo.  By answering a question on this blog, Mr. Bayer does not become your lawyer.

Find Leon on Google+

Foreclosure Abuse: Banks Treat Homes as Vacant When Homeowners Still Live There

BurglarHomeowners who have missed mortgage payments (and even some that haven’t) might be subject to the newest foreclosure scandal – property management firms (hired by the banks) declaring homes abandoned and then breaking down doors, removing or damaging personal items, or changing the locks.

How does this happen? If a homeowner is 45 days late in making mortgage payments, banks often hire property management firms to determine if the home is vacant or abandoned. All in all, that’s not a bad thing to do.  Here’s the problem:  Apparently some property management firms have been deeming homes vacant when they clearly aren’t.

A recent lawsuit filed by the Illinois Attorney General Lisa Madigan alleges that Safeguard, the largest property management company in this industry, has been breaking into homes, damaging property, and changing locks even when there are clear signs that the homes are occupied — such as barking dogs, neighbors’ statements that someone lives in the home, cars in driveways, or even, in one case, the homeowner’s repeated calls to the property management company stating that he still lived in the home.

According to Madigan, her office has received over 400 complaints against Safeguard.