The person that bought my brother and SIL’s foreclosed house turned around and rented to them. Their problem now is the $30,000 deficiency from the foreclosed mortgage, the bank has just filed a lawsuit against them. To make matter ever worse, my SIL has just been diagnosed with cancer again.
Although sometimes circumstances are such that you don’t get notice. My BIL was almost foreclosed on during his divorce. He was giving his wife the money to pay the mortgage, she was living in the house and getting the mail and somehow, the mortgage wasn’t getting paid.
I had a delinquency when we first moved in because the bank adjusted my escrow, but the bank had the wrong mailing address, so I never got the update. Fortunately, they found the right mailing address for the “beginning foreclosure” notice and I was able to immediately make good.
It just happened to my little sister. She somehow found a landlord who not only didn’t check her credit, but also allowed her to pay the deposit in installments. I would say this is a one in a million situation and, as always with her, I’m waiting for the other shoe to drop. Our other sister, who works in real estate law, thinks she was stupid to not wait it out in the house, payment free, but I think she was right to take the chance of the apartment (nicer than her house, btw) when she could. She wasn’t taking advantage of not making mortgage payments anyway.
I saw, with my own two eyes, the house of the people across the street being auctioned off last January. They’re still there. We think they made some arrangement with the buyers.
On those house flipping shows on A & E and TLC, often the flippers seem to be walking around and assessing the property they’re going to flip, and I see stuff in the house. Furniture, belongings, etc. Are those houses likely foreclosures, then? Why don’t people take their stuff with them?
Interesting. In some Canadian jurisdictions, the mortgagee has to make a choice: foreclose and take title, which wipes out the deficiency, or sue for the deficiency but not foreclose. Can’t do both.
Sorry to hear about your SIL.
It is my understanding that flipping doesn’t usually involve foreclosures, just low-priced fixer-uppers.
Circumstances such as what? I can’t envision any foreclosure scenario where the foreclosees wouldn’t see it coming down the pike months in advance.
I assume what he means is that if you don’t have they money from month to month to pay your mortgage, you don’t have the money from month to month to save up for first/last/security.
But nevertheless it is one of those situations that doesn’t get better by ignoring it and hoping it will magically go away. This is pretty common with people in deep financial trouble – they just start tossing the unopened bills in a drawer and going about the rest of their daily lives, trying hard not to think about it, until everything comes crashing down.
It is obviously true that once a person knows he or she can’t make the mortgage monthly, and there is no chance to re-fi or make it work, then the smart thing to do is to immediately try to sell or start saving up for the place you’ll have to get when you leave, but people who are in the midst of losing their home don’t always do the smart thing, the very hard thing, they do the stupid thing because it’s easier.
Well, if the place you are going to is much smaller then the place you have now, or if your going to ‘impose’ on a relative or friend, then the matter of storage of your possessions comes into question. Maybe you can afford to put everything in storage or maybe that is too expensive. So you just leave some stuff behind.
Maybe on those TV shows, the house was used as a rental and the tenants trashed it and left their junk when they were evicted. If the owner didn’t want to put the money into it to make it livable again, it’s easier just to sell it, particularly if you’ve depreciated the value over time.
StG
Also work in a period of denial of about 3-6 months while increasingly late mortgage payments get scraped together. “I’m behind, but only 30 days–I can get it together and make this work out.” Later: “30 days behind, I won’t have the payment until next payday-that one will only be 2 weeks later than I already am so I’m still really only 30 days behind…” etc. And say this goes on for 4-8 months until finally you’re 3 months behind with no prayer of ever catching up, your other debts are just as behind and your credit is now hosed so forget a refi (you know noboy’d refi a disaster like you) because maybe you’re already working a 100% mortgage and have zero equity. So you get the big old nastygram from the bank with the F-word stamped all over the top of the page and the light comes on: “Gee, I’d better make some different living arrangements” (if you’re smart) or maybe you think, “Ok, auction date is still 3 months out–I can dig out still!”
Even if you finally understand that you need to move, you have to sell the house. If you’ve got 90-100% loan-value that means that you can’t make emergency concessions on the sale price–you have to stick to your guns on the market value of the house. A bank is not likely to work with you on a “short sale” because that equates to saying, “Ya, dump the house for $20 and call the rest ‘unsecured debt,’ We don’t mind.” Why agree to a short sale when they can repo it and then turn it around for market value (assuming you don’t totally wreck the place). Heaven help you if the market’s gone soft.
I have noticed a huge increase in the number of extended stay hotels, I assume this is what most people do short term.
There is also the related circumstance where someone is renting and making their payments, but the landlord isn’t: what happens then would depend on if the renters are aware of this fact.
If the landlord(s) are jerks and/or have their heads stuck in the sand and keep their renters in the dark, then I can see them getting quite the surprise one morning.
Or, as what happened to the people who used to live next to me, since their scummy landlord appeared to be still listing that house as his primary residence all of the various foreclosure notices, offers from enterprising businesses to buy the house, etc., arrived in their mailbox. (Some of those wound up in our mailbox: our mailman of the time wasn’t too good at separating the mail properly.) So they had plenty of warning before the hammer came down.
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If somone is renting the house, the property would probably be sold with the tenants in it. If the new buyer wanted to evict them, it would take three to six months to do it. The displaced tenants would have plenty of time to find a new place.
Well, that depends on the state, and it depends on how much warning is “lots.”
Foreclosure can happen very fast in Georgia. Theoretically, you could miss one payment, the lender can accelerate the mortgage (i.e. call the whole balance due) and begin forecloure proceedings immediately. After advertising the foreclosure one a week for four weeks in the local paper, the property gets sold on the courthouse steps the first Tuesday of the following month. It could all happen within five to six weeks, if the lender wants to be a real jerk about it.
Georgia is perhaps the least protective of homeowners’ rights of all the states.
This was not true when it happened to me, way back in the '80s. The landlord stopped making payments and the four-plex was repo’ed by HUD (Housing and Urban Development). In the infinite wisdom of the federal government, they decided they’d rather deal with an empty apartment building as an asset, than deal with the headaches of administering a full apartment building. All the tenants received eviction notices on November 1, to be out by December 31. Happy Christmas!
I can’t say what takes place elsewhere, but in Ontairo, the tenant’s contract remains, regardless of who the owner is. The tenant remains as a tenant with the new landlord/bank.
That right there can be a lot of it. If you’re in a situation like mine (extended illness and job loss) it is very easy to simply hide from your financial problems. The stress level is already so high that you just don’t want to think about the fact that the mortgage is late, utilities are late, you’re living on 49 cent burritos from the grocery, etc. At least until things start getting turned off and foreclosure notices arrive. Some will get jolted into fixing their lives and others will end up homeless.
I look back and really am shocked at my own behavior during that time, it is not at all like me to not deal with things and I spent that year avoiding the realities. I am just really thankful that I got my life turned around.
Hmm? What? Oh nothing.