I lost my job about a year ago and fell really far behind in my mortgage payments. The bank recently started a foreclosure on my home. I was out of town for a while and came home to find that I'm locked out of my house. What should I do? Do I have to find a new place to live already?
No, you don't have to find a new place to live just yet. The bank has the legal right to change the locks, but only if you've abandoned—that is, permanently moved out of—the home. Because you still live there, it can't legally do that. You have the right to stay in your home during the entire foreclosure process. (To learn the ins and outs of the foreclosure process, read Foreclosure Basics. To learn how foreclosures generally work in your specific state, see our Summary of State Foreclosure Laws.)
You legally own the home until the bank (or a third party) gets title to the home after buying it at the foreclosure sale. This means you don't have to move out until the foreclosure is over. (Learn more in When Do You Have to Leave Your Home When It's in Foreclosure?)
In fact, you might even be able to stay in the home for a while after the foreclosure. Your state may give you a period of time to buy back or “redeem” the property after the foreclosure sale and, depending on state law, you may be able to live in the home during the redemption period. (Learn more about the right of redemption following foreclosure.)
The mortgage contract that you signed when you took out the loan gives the bank the right to protect its interest in the home. If you permanently move out of the house, the bank will want to maintain and secure the property. The bank does this to preserve the value of the home. As part of this process, the bank will change the locks.
Typically, the way the bank finds out if a home is abandoned is by hiring someone to do a cursory drive-by inspection to see if anyone is living there. In your case, it's possible that the inspector mistakenly thought the home was vacant because you've been out of town. (Learn more about steps you can take to prevent a bank from locking you out of your home without the legal right to do so.)
The first thing you should do is call your loan servicer. Let the servicer know that you still live in the home and that it must give you access to the property immediately. If the servicer won't make arrangements to let you back into the home, you should contact an attorney who can help you enforce your rights.