The bank changed the locks on my door, but my home is still in foreclosure. Is that legal and what should I do?
The lock change might be legal—or it might be illegal—depending on whether your home 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; there’s probably a clause in there that states the lender has the right to take reasonable or appropriate action to protect its interest in the property if you abandon it.
What kinds of things can the servicer do to secure the property? Securing the property means doing things like:
The servicer can legally take these actions if you've abandoned the home.
Why change the locks? If you fall behind in payments, the servicer will want to find out if the property is occupied or vacant. The reason the servicer wants this information is 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 value of the property.
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.
If you're still living in the home, however, the bank can't take possession of it (or change the locks) until after the 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 are no longer residing in the property. For example, if the home is falling into disrepair or the lawn is severely overgrown, this might indicate that you've 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.
That’s not to say that some companies don’t jump the gun in categorizing a home as vacant. Certain field services companies have been accused of repeatedly:
Various factors can contribute to this happening. Generally, the determination is made quickly, perhaps after just one brief cursory visit to the property. There have been instances of certain companies deeming a home vacant even when there was evidence to the contrary, like a barking dog inside the home, a car in the driveway, garbage cans placed outside for pickup, or a neighbor’s statement that the home is occupied. (Learn more in Deceptive Foreclosure Practices: When Banks Treat Occupied Homes as Vacant.)
Or, there may be a financial incentive for a company to deem a property vacant because they may make more money that way. The company might charge $100 to board up the doorway or $60 to change the locks, for example.
One New York judge has suggested that homeowners who are wrongfully locked out of their own homes should cut off the padlock. The judge, Housing Court Judge Patrick M. Carney, noted that people should leave their house only when they are legally required to do so. (Read more about Judge Carney's advice to homeowners.)
If you come home to find the locks changed or the door padlocked, you should certainly call your loan servicer and let them know 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.) 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 what to do in your particular circumstances.