Homeowners in foreclosure have the legal right to remain in their home until the process is completed. The foreclosure process works differently in different states. In some states, the loan owner (the "bank") has to file a lawsuit with the court to foreclose, while in others, it can foreclose without going to court. Homeowners can live in the home during the foreclosure process; the bank can evict you only after the foreclosure is over. State law sets specific procedures for foreclosures and evictions following it.
If a home is vacant, however, the bank can go in and secure the property. Property preservation companies, also called "foreclosure cleanup companies" or "field service companies," working on behalf of banks are supposed to ensure that vacant properties in foreclosure are secure and properly maintained. But these companies are well known for committing serious abuses against homeowners, like breaking into still-occupied homes, stealing the homeowners' personal property, and damaging the place in the process.
While you have the right to occupy the home during foreclosure, if you abandon the property, most mortgages (and deeds of trust) give the bank the right to do whatever is reasonable or appropriate to protect its interest in the property.
Generally, a bank may do the following things to secure the property if the property is vacant:
Taking these steps is called "property preservation" in the mortgage servicing industry.
Generally, the task of securing the property falls on the servicer, which typically farms out these services (called "field services") to property management firms, which are known as "field service companies" or "property preservation companies."
Field service companies enter into contracts with banks and servicers to either:
So, subcontractors often determine the occupancy of homes. They also take responsibility for preserving properties until they're resold after foreclosure.
Once you become delinquent on your mortgage, the field service company or its subcontractor will inspect the property to determine its occupancy status. If the inspector deems the home vacant or insecure (usually based on a drive-by visit without any effort to contact any occupants), the company will take steps to secure the property.
Unfortunately, a field service company or its subcontractors might inaccurately designate a property as vacant. When this happens, the company will likely change the locks and remove the occupant's personal property—like computers, family photographs, and furniture—even though the house is legally occupied. The occupant might not be able to get back into the home for days and might never have the personal items returned.
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:
Field service companies sometimes ignore the rights of occupants in the course of securing a home. But some states (and homeowners) are starting to step up to protect the rights of homeowners.
The Attorney General of Illinois filed a lawsuit accusing the largest company in the industry of illegally breaking into occupied homes, locking the occupants out of the home, removing personal property, and shutting off utilities to the home—often when there was clear evidence that the property was occupied. The company also allegedly misrepresented to homeowners that they were no longer allowed to live in their homes and refused to allow them to re-enter the property when, in fact, the occupants were entitled to stay until the foreclosure was finished.
Also, Maine has a law that cracks down on property preservation companies. Under Maine's law, property preservation providers are prohibited from breaching the peace while going about their work. It also requires them to:
You can take steps to ensure that your bank or servicer (or the field services company that it hires) doesn't treat your occupied home as vacant.
If you're behind in payments, your servicer will probably call you to discuss the delinquency. When you talk to the servicer, let them know you're still occupying the property. All loan servicers keep communication logs that make a note of each time you call, along with information about the conversation. Communication logs typically aren't especially detailed. But if a dispute arises about the about occupancy, the log should contain a note that you verified that you're still living in the property.
If the servicer, or a field service company on the servicer's behalf, takes any steps based on an assessment that the property is empty (like illegally entering the property and taking your personal property), send a letter to the bank or servicer saying you're still occupying the property and detailing the unlawful actions. Send the letter by certified mail, return receipt requested, so you can prove that you sent it and that the bank or servicer received it.
The field service company might post a notice that it has deemed your property vacant before locking you out or taking other actions. Be sure to call the company and let it know that you're still living at the property. It is also a good idea to send a letter—again, via certified mail, return receipt requested—to prove that you've notified the company of your occupancy.
The abusive practices mentioned in this article, like wrongfully locking people out of their own homes, represent just a few of the offenses that property preservation workers have been known to commit. If you're the victim of a property preservation company and your servicer and the property preservation company aren't helpful when it comes to returning your belongings or compensating you for damage caused, speak to a qualified attorney. An attorney can advise you what to do in your particular situation, including possibly filing a lawsuit, as well as tell you about other options for your specific situation.