If you’re having trouble making your mortgage payments and have already missed a couple of payments (or if you’re contemplating a strategic default), you may be wondering how long you’ll be able to stay in your home before the bank can repossess it.
Before we dive into this topic I want to make it clear that FORECLOSURE IS NEVER A GOOD OPTION and we DO NOT advise homeowners to give up and allow the bank to forelcose on their property! Rather, if you are facing foreclosure we would strongly encourage you to explore your options, the best of which for most owners, is going to be selling your home through a short sale which will allow you to avoid forecosure and stall the process thus allowing you to extend your stay in the home!
Let’s get started. As a result of the devastating mortgage crisis, the banks are simply flooded with bad loans and their processes to handle these foreclosures are overwhelmed. Lenders simply can’t keep up. Even if people stop paying on their mortgage, the banks just can’t seem to react fast enough. This creates numerous problems as when these properties are abandon they begin to fall into disrepair quickly. For example, the landscaping is usually the first tell tale sign as it begins to deteriorate, lawns are often over taken by weeds or they die when they go unwatered for extended period. Once the yard begins to show signs of neglect this often attracts thieves and vandals who will break into homes looking for items of value. Furthermore, owners often elect to cancel the utility services prior to leaving their homes which means dehumifiers and furnaces are no longer circulating and removing moisture from the air, and worst yet sump pumps are unable to do their job and which leads to flooding of the basement after the first substantial rain. These problems in turn can lead to more serious issues such as mold which can cost tens of thousands of dollars to remedy! As such we encourage homeowners to stay in their homes not only to take advantage of the opportunity to live mortgage and rent free and save some money, but also to help maintain the property so the bank can get it sold, and sold for top dollar. This helps not only the bank, but also your neighbors whose property values will be influenced by the sales price of your home.
In Ohio, the bank can not evict you until 30 days after the auction sale, that is until after the Redemption Period has expired. It usually takes the banks about 12 months from the date of the first missed payment to get an auction date scheduled and foreclose on a home however, sometimes the banks simply won’t file a foreclosure notice, or the lender makes a decision to cancel an auction sale and reserve the right to foreclose due to various circumstances, such as a big tax lien or no property taxes being paid. In these instances homeowners can often stay in their home for the standard 12 month time frame.
Isn’t this a lot like squatting? Not at all, squatting is when you are in someone else’s home and thus it is illegal.
Even if no mortgage payments are made, a person still owns that property until the bank legally and officially takes it back through the foreclosure process, or the house is sold at auction to another party.
The banks can’t force you out until they own the property. You own the property even if you are late in payments, have a notice of default filed, or a notice of trustee sale. Nothing can be done until the property has been sold at auction or the banks take it back, and until after the expiration of the Redemption Period.
We have clients who lived in a 6,000-square-foot luxury home in New Albany, Ohio, which they had bought with an interest-only loan. As the mortgage payments became increasingly onerous, they realized they couldn’t afford to keep their house so they turned to us and their lender for help, even filing for a loan modification.
Their lender did not respond to their requests for a loan modification, and thus they decided to walk away, and allowed us arrange for a short sale of the home.
However, they didn’t “walk away” immediately. They stopped paying in October 2008 and didn’t leave the property until summer 2009.
The bank didn’t force them out, they maintained the property and agreed to leave after the sale was closed.
Not paying does not mean you stop paying on everything The “homeowner” still needs to outlay for such things as utilities, maintenance and — most importantly — insurance (and taxes if possible). Even if you don’t pay your mortgage or you actually do walk away, until the bank legally takes back the home you are still liable if something tragic happens at the property.
We DO NOT encourage homeowners to walk away from their properties AND RATHER encourage them to stay in the home and work with an agent who specializes in short sales to contact and work with their lender to NEGOTIATE A SHORT SALE OF THE PROPERTY. In negotiating for the property to be sold short, we work to convince the lender to accept the sale amount as payment in full and not pursue the homeowner for a deficiency judgement which in turn helps to maintain the homeowners credit rating. The short sale can actually also extend the foreclosure process process as the banks will typically cancel the auction even after it’s been scheduled if a reasonable offer is received. While the short sale is being negotiated homeowner’s are encouraged to use the money not being paid to the banks to pay off other debts. If you stay in the house a year or more, in many cases you can save money up for a rental downpayment, pay off your debt, and/or avoid bankruptcy.
This “live in the home and not pay your mortgage” phenomenon has happened only through the wink-wink compliance of the lenders. As again if the home goes vacant, utility bills aren’t paid, all common maintenance from landscaping to repairs stops, and, worse, the property is open to vandals. The banks prefer to have the properties occupied.
If you™re facing foreclosure you™re facing some very important decisions. We want you know you™re not alone and we are here to help with any questions you may have to assist you in making the best decisions for your situation. There is no charge for this service and we are happy to help! We offer confidential and professional real estate advice.
The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in; Bexley Columbus Delaware Downtown Dublin Gahanna Grandview Heights Granville Grove City Groveport Hilliard Lewis Center New Albany Pickerington Polaris Powell Upper Arlington Westerville Worthington
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