If you move out of your home before a foreclosure becomes final, the lender may pursue an expedited foreclosure, also known as a fast-track foreclosure. This will prevent the home’s value from diminishing and protect both the homeowner and the lender from absorbing further losses. Expedited foreclosure laws apply in fewer than 10 states and take effect only if the home is considered legally abandoned.
To trigger an expedited foreclosure, the lender must file a motion alleging that the home has been abandoned and may be at risk of harm. Evidence that suggests abandonment may include broken doors or windows as well as utilities being turned off. The homeowner must receive notice of this motion from the lender, and the sheriff may need to visit the home to assess whether it has been abandoned. However, the court must make the final decision at a hearing on whether the home has been abandoned. If the court agrees with the lender, the foreclosure may happen within a few months.
Reasons for Expedited Foreclosures
As the homeowner, you may not want the property to lose significant value once you leave it. An expedited foreclosure prevents a stark decline in the home’s value due to lack of maintenance. As a result, the homeowner may be less likely to face a deficiency judgment after the foreclosure sale. A deficiency judgment might be substantial, by contrast, if the value of the home drops well below the amount owed on the mortgage after the owner abandons it.
Also, neighborhoods with abandoned homes tend to lose value overall. This can harm other homeowners in the area who are trying to build equity in their properties. Getting a new owner on the property sooner rather than later means that repairs and maintenance will start again.
The bank that issued the loan probably will end up buying the home at the foreclosure sale because most real estate buyers are not interested in these properties. Then, the bank will sell the property to a new owner. By expediting the foreclosure process, the bank can sell the home for a better price before its value has been excessively depleted because of the abandonment.
When the Home Is Not Abandoned
If you still live in your home, you may nevertheless face a motion by the lender for an expedited foreclosure. You will want to stop this process if possible so that you have more time to plan a move and explore alternatives to the foreclosure. If you receive notice of a motion for an expedited foreclosure, you should carefully follow the requirements for responding and objecting to the motion. This probably will involve submitting evidence and attending a hearing in court on whether you have abandoned the home. If you do not attend the hearing, you should expect the court to find that the home has been abandoned.
Before the hearing and at the hearing, you will need to submit evidence to the court to counter the lender’s evidence of abandonment. You might point out that you still have personal belongings in the home, for example, or that you are still making payments on utilities. If your home has sustained visible damage or is showing signs of decay, you should address those issues to the extent possible. Even if you are considering moving out of the home, you should not tell the bank or the court about this possibility unless specifically asked.