When a large number of people buy homes they can’t afford with the idea that the home’s value will only go up and never down it is inevitable that you end up with a host of foreclosures. As the housing crisis unfolded home values in some areas of the country dropped 25% to 50%. As a result a record number of home foreclosures have occurred since the housing crisis. Families that had done everything right and just had a round of bad luck – maybe their jobs were tied to the real estate industry – got caught up in the mix.
But for some families, foreclosure hasn’t meant immediately leaving the property. Some families have been able to stay for months if not years in homes that the bank now owns. How?
How to Stay in Your Foreclosed Home
Your ability to stay in your foreclosed home is dependent on what legal actions have been taken by the owner of the property (likely your bank). If your home has been sold at a foreclosure auction and you still occupy the property, the new owner can begin eviction proceedings. Eviction can take up to 30 days depending on the municipality and how quickly the new owner files for eviction. Once your case is heard, the court will award eviction and you have 48 hours to leave the premises. The Sheriff’s Department will come and post the eviction notice on the home; they may also physically remove you from the home once the 48 hours have passed.
The best way to stay in your home that is facing foreclosure is to get current by paying all past payments including interest and fees. But that’s isn’t always possible and you will lose your home to foreclosure. To avoid this fate – or to extend your time in the home – you want to delay the legal proceedings as long as possible. While the ethics of this strategy can be debated, legally you are allowed to slow proceedings down. The idea is to either file a complaint or motion with the court at any chance you have. You can also continue negotiations with the mortgage holder in order to come up with a repayment plan. You can also try to work into one of the government’s Making Homes Affordable plans. Bankruptcy may also delay foreclosure while ruining your credit.
What many foreclosed on families are shocked to find is that they can stop making payments (and setting the money aside into a savings account) for months without hearing anything from their mortgage company. This is especially true of megabanks that are holding thousands upon thousands of homes that are behind on payments. With a such a large backlog of foreclosures, it can take months before your property is seized. This allows you to live rent-free inside the property until the bank can get its act together.
How Long Should You Stay in Your Foreclosed Home?
Now that you’re aiming to keep yourself in your foreclosed property as much as possible the question becomes how long should you stay?
It might seem unethical to continue to live in a place that you have no legal right to and without paying rent while your neighbors are working hard to pay their mortgages on time. Yet, legally, you can stay as long as the legal process allows you to. If you are able to delay the process for 12 months and save that money for other bills or to build up your emergency fund, you might as well. However, once it is time to go – when eviction has been granted to the property owner and the Sheriff’s Department has informed you of your need to leave – don’t make things unpleasant. Pack up your stuff and be happy you were able to live rent-free for as long as you did.