I lost my job a few months ago and fell behind in mortgage payments. The bank started a foreclosure. I went out of town last week, and while I was gone, the bank changed the locks on my door. Is that legal, and what should I do?
The lock change isn't allowed because you still live at the property. Whether a bank can legally change the locks on a home in foreclosure depends on whether the property is vacant or occupied.
If the house is vacant, the servicer (on behalf of the lender or subsequent loan owner) can take steps, like changing your door locks, to secure the property even if it's still in foreclosure.
Check your mortgage or deed of trust. The loan contract usually allows the lender to conduct property inspections. It probably also has a clause that says the lender has the right to take reasonable or appropriate action to protect its interest in the property if you abandon the home.
The property protection clause permits the lender to secure the property if necessary. The clause probably looks something like this:
Protection of Lender's Interest in the Property and Rights Under this Security Instrument. If Lender reasonably believes that Borrower has abandoned the Property, then Lender may do and pay for whatever is reasonable or appropriate to protect Lender's interest in the Property and/or rights under this Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing the Property.
So, the lender can enter the property to make repairs, change locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or dangerous conditions, and have the utilities turned on or off as needed if you've moved out of the home.
Generally, taking steps to protect the bank's interest in the property is called "property preservation." Again, the servicer may take the following actions, among others, to secure and preserve the property:
The servicer can legally take these actions if you've abandoned the home.
If you fall behind in payments, the servicer will want to determine if the property is occupied or vacant. The servicer wants this information because abandoned homes are more likely to be vandalized or suffer other forms of damage. Because the home acts as collateral for the loan, the servicer wants to prevent anything that might negatively affect the property's value.
And, because the servicer is responsible for making sure the property is secure, it will typically hire a property management firm, called a "field service company," which in turn may hire a subcontractor to find out if the property is vacant and perform any actions needed to secure the property. Changing the locks is a typical step when securing a vacant property.
However, if you're still living in the home, the bank can't change the locks until after it gets ownership of the property through foreclosure. Even then, it will need to take proper steps to evict you if you haven't already left.
Keep in mind that, even during a foreclosure, you're still responsible for the upkeep of the home. Sometimes, occupied homes are mistakenly categorized as unoccupied if the inspection reveals some evidence that you're no longer living in the property. For example, if the home is falling into disrepair or the lawn is severely overgrown, this might indicate that you've permanently left the home—even if you're still living there.
If you maintain the property during the foreclosure process, there's less chance that your home will be incorrectly deemed unoccupied.
Unfortunately, some companies mistakenly categorize a home as vacant. Certain field services companies have been accused of repeatedly:
Various factors can contribute to a home being miscategorized as vacant. Generally, the determination is made quickly, perhaps after just one brief cursory visit to the property. Companies have incorrectly decided that a home was vacant even when evidence to the contrary existed, like a barking dog inside the house, a car in the driveway, garbage cans placed outside for pickup, or a neighbor's statement that the property is occupied.
Or, a company might have a financial incentive to deem a property vacant because the company makes more money. For example, the company might charge $100 to board up the doorway or $60 to change the locks.
If you come home to find the locks changed or the door padlocked (and you still live there), you should call your loan servicer and tell them that you've been illegally locked out of your home. To figure out who your loan servicer is, look at your monthly mortgage payment coupon or statement.
You should also call the field service company (if you can find out which company did the lockout), though they'll likely refer you back to the servicer. You might also want to speak to a qualified attorney who can advise you on what to do in your particular circumstances.