What Is a Fast-Track Foreclosure?
State fast-track foreclosure laws expedite the foreclosure process when a homeowner abandons (vacates) the home.
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In certain states the foreclosure process can drag on for several months, or even years, which can be frustrating for the homeowner. For this reason (and others), homeowners sometimes decide to move out of their homes before the foreclosure process has finished. The foreclosure industry generally refers to this type of home as "abandoned.”
To reduce the number of abandoned homes lingering in foreclosure, some states have enacted fast-track laws that expedite the process when a homeowner vacates the premises. Read on to learn more about fast-track foreclosures, which states have fast-track foreclosure laws, and why an expedited process for foreclosing abandoned homes is generally beneficial for the homeowner, the community, and the lender alike.
Fast-Track Foreclosure Basics
A fast-track foreclosure is an expedited process which lenders or servicers use when the homeowner leaves the home before the end of the foreclosure. If the home meets the criteria for being “abandoned” under state law, the lender can foreclosure much faster than it otherwise could under the state’s general foreclosure laws.
When determining whether a home is abandoned, the court will generally consider factors such as:
- the home’s condition (whether there are any broken windows or doors)
- the home’s surroundings (whether there is an accumulation of unclaimed mail, newspapers, flyers, trash, or debris around the home), and
- utility consumption (whether the gas, electricity, and water is turned on and being utilized), among other things.
In most cases, the foreclosure sale takes place shortly after a determination of abandonment.
Which States Have Fast-Track Foreclosure Laws
In recent years, at least seven states have enacted laws to speed up the foreclosure process for abandoned homes. Those states are:
Benefits to a Fast-Track Foreclosure
There are many benefits to speeding up the foreclosure of a vacant home. In fact, in most cases, a fast-track foreclosure can benefit the homeowner, the community, and the lender.
- How a fast-track foreclosure benefits the homeowner. A fast-track foreclosure process can benefit homeowners who have vacated a home since they won't become the victim of a zombie foreclosure. (To learn more about zombie foreclosures and the harmful effects they can have on homeowners, see Zombie Foreclosures.)
- How a fast-track foreclosure benefits the community. When a house is vacant, a long foreclosure process can harm the neighborhood. Unoccupied homes quickly start to deteriorate. The lawn doesn’t get watered, garbage tends to pile up, and the home falls into disrepair. Empty homes are also vulnerable to vandals, squatters, and criminals, which drags down the value of not only the house itself, but also the entire neighborhood. A fast-track foreclosure may help get a new owner in the home more quickly, who will then maintain it.
- How a fast-track foreclosure benefits the lender. A fast-track foreclosure process allows the lender to obtain title to the home quicker, which preserves more of the home’s value since it is less likely to deteriorate or get damaged before the foreclosure is over. The lender can then put the property on the market and sell it to a new owner for a higher price.
Fast-track foreclosures are only beneficial in cases where the home is actually empty. Unfortunately though, sometimes lenders pursue fast-track foreclosures without having clear evidence of abandonment. When this happens, a homeowner who still occupies the property could potentially lose the home much quicker than he or she actually should. (Learn how to protect yourself from an improper fast-track foreclosure.)