In a recent public address in Buffalo City Hall, Housing Court Judge Patrick M. Carney gave homeowners in foreclosure some advice: Stay in your home until the foreclosure sale is over and you get a court order telling you to leave.
When a bank wants to foreclose on your home, it must go through certain state foreclosure procedures. You don’t have to leave the home until the bank follows the procedures and sells your home. It seems simple — so why would Judge Carney feel the need to state what seems like the obvious? Enter the banks and property management companies.
Banks Trying to Get Homeowners Out Earlier
Judge Carney talked about banks’ “carefully worded” notices that might confuse homeowners into thinking they had to leave their homes right away, before the end of the foreclosure process. (Read more about Judge Carney’s comments.)
Property Management Companies Stand to Gain From Vacant Homes
But there are other, less subtle, attempts to get homeowners to leave. Some banks hire property management companies to deal with properties that are in foreclosure. Often, these companies are tasked with checking to see if the homeowner still occupies the home. If the home is vacant, the company is paid to take steps to secure and maintain the property. This means that if the homeowner no longer lives in the property, the management company will make more money than if the homeowner is still there.
So what’s a property management company to do if the homeowner decides to stay until the foreclosure process is over? How about padlock the door, throw out the homeowner’s possessions, and treat the home as abandoned. At least, that’s what Illinois Attorney General Lisa Madigan claims one big industry player, Safeguard, is doing. (Read more about the Illinois Attorney General Case against Safeguard.) Apparently, this is happening in New York too, because Judge Carney told homeowners to cut off padlocks on their front doors (presumably placed there by similar companies) and continue living in their homes until the bank has the legal right to kick them out. (Read more about banks treating occupied homes as vacant.)
Why Stay in Your Home?
Many people leave their homes before the foreclosure process is complete, not understanding that the home could linger in limbo for years. Because of the high number of foreclosures and low property values, some homes remain in the foreclosure process for years before the bank actually sells the property.
But until ownership changes hands, you are on the hook for property taxes and upkeep of the property. Some homeowners who have moved on, thinking their home will soon be sold, are shocked to later get a hefty bill for property taxes or for city and county fines for trash removal and maintenance costs. The situation is so common, that there’s now a name for it– zombie foreclosure.
When to Leave?
Judge Carney’s advice: Leave your home when you get a court order with a notice to leave.