DO NOT LEAVE YOUR HOME… UNTIL THE BANK FORECLOSES OR THE SHORT SALE IS COMPLETED
Every day people come into my office indicating that they moved out of their home many months (or even years ago) and the bank still has not foreclosed. They are now concerned because the city is sending them bills for maintenance on the property and the Homeowners Association is suing them for back payments even though they are no longer living at the home. If you are behind on your mortgage, have tried a loan modification and have been denied or know you will not be able to keep the home, what should you do?
First, DO NOT MOVE… I REPEAT…DO NOT MOVE UNTIL THE BANK FORECLOSES OR THE SHORT SALE IS COMPLETED. You are now living in your home without paying your mortgage. It is free! You should not start paying rent someplace else when you can live in your home for free.
Second, KEEP UP THE PROPERTY. YOU ARE STILL RESPONSIBLE FOR THE PROPERTY UNTIL THE BANK FORECLOSES OR THE SHORT SALE IS COMPLETED. So, even if you moved, you are still responsible for the maintenance of the property and payment of any Homeowner Association dues. You do not need to pay the property taxes, but you should maintain the homeowners insurance. Therefore, if you are still responsible for the maintenance and HOA payment, you might as well enjoy the property and the amenities.
Third, CONTINUE TO TALK TO YOUR LENDER TO SEE IF ANY NEW OPTIONS ARE AVAILABLE TO YOU. Starting January 1, 2011, the State of California is offering new assistance programs through your lender if you are behind on your mortgage.
Fourth, SEEK LEGAL COUNSEL. Depending on your situation, a real estate or bankruptcy attorney will be able to advise you whether a short sale may be a better alternative for you than a foreclosure. Also, if you have other debt which you are unable to pay off such as credit cards, lines of credit or car loans, a bankruptcy may be the best alternative for you. However, if you are no longer in the home, the debt against the property cannot be used to offset income. Therefore, if you (or your family) have income over the average median income in California (Family 1- $47,234, Family 2-$61,954, Family 3-$67,562), you will want to file the bankruptcy case prior to leaving the home. Leaving the home prior to the bankruptcy filing may mean the filing of a Chapter 13 repayment plan versus a straight Chapter 7 where no debts must be repaid.
In conclusion, do not move until the Bank forecloses or the short sale is completed. It is still your home until the bank forecloses which can be months or years from the time you stop paying. The average time of a foreclose in California is now 451 days from the date of default. That means potentially 451 days of FREE RENT or more. Since you are still responsible for the property, you might as well enjoy it. This is a complicated area of the law. You are in the deep end of the pool. Do not swim alone. The buddy system is essential. Seek a buddy in legal counsel prior to taking any action. I see people everyday for a FREE 30 minute consultation in my offices located in Walnut Creek, Antioch and Brentwood.
WE ARE A DEBT RELIEF AGENCY. WE HELP PEOPLE FILE FOR BANKRUPTCY. THIS INFORMATION IS NOT PROVIDED AS LEGAL ADVICE AND SHOULD NOT BE RELIED UPON IN MAKING ANY DECISION REGARDING A VOLUNTARY DEFAULT, SHORT SALE, FORECLOSURE OR BANKRUPTCY. THIS INFORMATION IS NOT A SUBSTITUTE FOR OBTAINING TAX & LEGAL ADVICE REGARDING AN INDIVIDUAL SITUATION. GRIMESBKLAW.COM
© 2011 Joan Grimes