Maine Tackles Property Preservation Abuses During Foreclosure
Maine is cracking down on property preservation companies to protect homeowners in foreclosure.
Property preservation companies (also sometimes called foreclosure cleanup companies) working on behalf of banks are supposed to ensure that vacant properties in foreclosure are secure and properly maintained. However, these companies are well known for committing serious abuses against homeowners, such as breaking into still-occupied homes, stealing the homeowners’ personal property, and illegally locking people out of the wrong home.
To address this issue, lawmakers in Maine are cracking down on the property preservation industry. Read on to learn more about the typical abuses perpetrated by property preservation companies and how Maine’s new law addresses these abuses, among other things.
Understanding Property Preservation Companies
When you fall behind in your home mortgage payments or go into foreclosure, the bank will usually send an inspector out to your property to determine if the home is occupied or vacant. If the inspector determines that the home is vacant, the bank will take steps to ensure that the property is secure and maintained. (The mortgage contract that you signed when you took out the loan gives the bank the right to protect its interest in the home.) Usually this means hiring a property preservation company.
Even though you still legally own the home, the property preservation company (on behalf of the bank) can do whatever is necessary to secure an abandoned property such as:
- winterizing the home
- removing trash
- making repairs, or
- changing the locks.
Problems With the Process of Protecting Abandoned Homes
The inspectors who make the determination that a property is vacant or occupied are not paid very well. In fact, they may only make a few dollars per inspection by the time all of the various other parties involved in the process take their cut. This means that they have little incentive to be thorough in the inspection process. Sometimes the inspection consists of the inspector taking a quick look while he or she drives by the home, which can lead to the incorrect determination that the home is vacant. The homeowner may just be at work or on vacation, for example.
Yet, once the inspector deems a home unoccupied (perhaps incorrectly), the bank contracts with a property preservation company, which in turn may hire a subcontractor. The property preservation company or its subcontractor then sends low-paid, unlicensed workers (who may or may not have a criminal record) to perform the preservation activities on the bank's behalf. These workers have been known to take all sorts of illegal actions in the name of "property preservation."
Common Abuses Perpetrated By Property Preservation Workers
Homeowners have reported that property preservation workers often break into currently occupied homes, causing damage and taking valuables. Some of the reported abuses that have been committed by property preservation workers are:
- changing the locks on the wrong house
- ripping out holes in walls (purportedly on a search for hazardous Chinese-made drywall), and
- removing personal property, such as computers, clothes, paintings, electronics, and jewelry.
In many instances, the workers ignored obvious signs that the home is still occupied, like a fully stocked refrigerator or a car parked in the driveway, and went ahead with the “preservation” services anyway.
Maine’s Response to Abuses in the Property Preservation Industry
In response to these types of abuses, Maine passed a new law (LD 1389) that prohibits property preservation providers from breaching the peace while going about their work. It also requires them to:
- inventory all personal property removed from the home
- keep a permanent record of all steps taken to preserve and secure the home, and
- make that record (along with the inventory of removed items) available to the homeowner upon written request.
Expedited Foreclosure Procedure for Abandoned Properties
In addition, LD 1389 creates an expedited foreclosure procedure for abandoned properties if the lender is able to show evidence of abandonment, such as:
- doors and windows on the home are continuously boarded up, broken, or left unlocked
- trash or debris has accumulated on the property
- furnishings and personal property are absent from the home
- the home is deteriorating so as to constitute a threat to public health or safety
- the lender has changed the locks onthe home and the homeowner has not requested entrance to, or taken other steps to gain entrance to, the home
- reports of trespassers, vandalism, or other illegal acts being committed on the premises have been made to local law enforcement authorities
- a code enforcement officer or other public official has made a determination or finding that the home is abandoned or unfit for occupancy
- the homeowner is deceased and there is no evidence that an heir or personal representative has taken possession of the home, and
- any other indication that the home was abandoned.
If the court determines that the property was abandoned, the foreclosure action may be advanced on the docket and receive priority over other cases. This way, lenders can get properties that actually are abandoned back on the market quicker, hopefully avoiding a depreciation of home values in the neighborhood.
Hiring an Attorney
The abusive practices mentioned in this article represent just a few of the typical offenses that property preservation workers have been known to commit. There are, of course, others. If you have been the victim of a property preservation company, you should speak to a qualified attorney who can advise you what to do in your particular situation.
For More Information
To learn more about the legislative history of LD 1389 and read the text of the new law, go to the State of Maine Legislature’s webpage. Enter “1389” in the box next to “LD #” and hit “Search.” To learn more about Maine foreclosures in general, visit Nolo’s Maine Foreclosure Law Center.