After a foreclosure sale, the bank or the foreclosure auction winner is legally entitled to seize the property. For homeowners, this often poses a problem if they haven’t yet secured housing. In order to accommodate former homeowners, the law offers certain protections that must be adhered to.
A written notification must be provided to the former homeowner if they have not abandoned the property after the foreclosure sale. The letter must clearly state that they are no longer in possession of the property and must vacate the premises. The notice, which is usually issued by the bank, will request that the occupant move out immediately.
If the former homeowner disregards the written notification, the bank or new owner can file an eviction lawsuit with the county court. According to the Housing and Economic Rights Advocates of California (HERA), a homeowner must be given three days to vacate the home before a lawsuit is filed.
“You are legally allowed to stay in your home until a sheriff evicts you. The new owner is not allowed to evict you, or change your locks or remove your belongings without taking you to court through an Unlawful Detainer case, which they can only start by giving you a Three-Day Notice to Quit, and then a 5-Day Unlawful Detainer Summons and Complaint.
“The new owner (which might be the lender or investor in your mortgage) may also offer you cash to move out because it is cheaper than taking you to court. There is no set amount, but usually the sooner you are willing to move out, the more the new owner is willing to pay. The agreement should be in writing and you should get the money either before or upon move out. Take pictures of your home (inside and out) before you leave so that you can prove the condition you left it in.
“If you do not respond to the Unlawful Detainer suit within five days of being served, the new owner can try to get a judgment against you right away, and you may lose the opportunity to contest the eviction. You should consult with a legal aid office, or a Self-Help clinic at the courthouse for help responding to the suit.”
Once the eviction lawsuit is filed, a hearing will be scheduled by the court. Though laws vary from state to state, the former homeowner will usually have 30 days to respond to the lawsuit before it goes to trial. During this period, the former homeowner can attempt to contest the foreclosure by showing payments had been made and there was no legal basis for the sale of the home. This course of action is not usually possible or successful, therefore, most homeowners attempt to find suitable housing during this time.
Once the case is presented before the judge, each party will have a few minutes to state their case. If the bank or the new owner is able to show proof, such as closing papers or a deed, that they are in fact the rightful owners, the judge will rule in favor of the eviction. However, if the former owner can establish mitigating circumstance, the judge may allow more time to vacate the home, though in some cases, the judge may order a next day eviction. Some states, however, allow a former homeowner 10 days to appeal the eviction decision.
Once the judge has entered a ruling and set a date for the eviction, the sheriff will post an eviction notice and visit the home on the day of the eviction to ensure the occupants vacate the premises. If the former homeowner refuses to leave, the sheriff may use force to remove the occupants. If any items are left in the home, they will be packed and moved into storage. The former homeowner will have a deadline to retrieve the items and will be responsible for paying storage as well as any additional fees.
On average, evictions take eight weeks following the delivery of the notice. Approximately 5% to 7% of homeowners are unable to save their properties from foreclosure. Most, however, manage to refinance their mortgage loan or file Chapter 13 Bankruptcy. Roughly 20% of homeowners are able to reinstate their current mortgage.
The Servicemembers Civil Relief Act (SCRA) gives all active military members, reservists and member of the National Guard, legal protections against foreclosure and eviction. The protections begin on the date of entering active duty and generally end within 30 to 90 days after discharge.
The protections offered by the SCRA include stopping foreclosures without a court order and
limiting interest on mortgage loans taken out before joining the military to 6 percent. Also, if active service members are listed defendants in a civil court proceeding, the court may grant a 90-day stay in the proceedings. If the service member submits a letter requesting a stay, the court must grant a minimum 90 day stay.
Homeowners must weigh the consequences of going through the eviction process since it can negatively affect their ability to rent or apply for benefits. Evictions become public record, and tenant-screening companies may search these records and include them in tenant-screening reports, which may impact your chances of finding a rental property. Evictions will remain on former homeowner’s credit report for seven years from the filing date and will damage their credit score.
According to Experian, a leader in consumer credit reporting, “A foreclosure remains on your credit report seven years, so it will have a long-term effect on our creditworthiness. But, because negative information is deleted eventually, you can rebuild your creditworthiness if you take control of your debts and build a history of positive payments that will continue to appear after the foreclosure disappears.”