What Might Happen If You Move Out During a Foreclosure: Fast-Track Laws

In some states, if you move out your home during a foreclosure, the bank may expedite or “fast-track” the foreclosure.

Depending on the state and whether the process is judicial or nonjudicial, a foreclosure might drag on for several months, or even years. If a homeowner (the borrower) moves out of the home before the foreclosure is finished, the home might deteriorate which reduces its value, and hurts the borrower, the bank, and the neighborhood.

To speed up the process if a borrower moves out of the home before the process is finished—and get the property in a new owner’s hands more quickly—some states have fast-track foreclosure laws. Keep reading to find out how fast-track foreclosures work and what you should do to make sure a bank does not expedite the foreclosure of your home if you still live in it.

Upside to Fast-Track Foreclosure Laws: Avoiding Abandoned Homes

If a borrower moves out of a home before the foreclosure ends, the mortgage servicing industry commonly calls this type of property “abandoned.” Abandoned homes quickly deteriorate. Often, the lawn turns brown while the pool turns green and general maintenance goes undone. Vacant homes also attract vandals, squatters, and criminals. All of these things reduce the value of the property.

How abandoned homes hurt borrowers. If you vacate your home before the foreclosure ends, and the condition of the property deteriorates so much that the home sells at the foreclosure sale for less than you owe on the mortgage, you might have to pay a deficiency judgment. The lower the value of the home, the higher the potential deficiency judgment.

How abandoned homes hurt banks. If you stop making your mortgage payments, the bank will attempt to recoup the money it loaned you by selling the home at a foreclosure sale. In most cases, the bank buys the home at the foreclosure sale using a credit bid because there aren’t any other bidders. (A credit bid means that the bank bids the debt you owe. The foreclosing bank doesn’t have to bid cash at the sale, unlike third-party bidders.) A fast-track foreclosure process allows the bank to obtain title to the home quicker so it can sell it to a new owner sooner before the property loses value.

How abandoned homes hurt neighborhoods. A vacant home drags down both the value of the home itself, but also the entire neighborhood. A fast-track foreclosure may help get the property in the hands of a new owner who will maintain it.

So, there are many benefits to speeding up the foreclosure of a vacant home. In the end, in most cases, a fast-track foreclosure can benefit the borrower, the bank, and the community.

How Fast-Track Foreclosures Work

About a dozen states—including Florida, Maryland, Pennsylvania, and New Jersey—have passed fast-track foreclosure laws. In these states, if the home meets the legal definition of “abandoned” under state law, the bank may use a special process that allows it to foreclose much faster than it otherwise could under the state’s regular foreclosure laws.

While the process is different in each state that has a fast-track foreclosure law, here's how it generally works:

  • The lender files a motion with the court at the time it files the foreclosure lawsuit, or sometime after, that states that the home is vacant and is at risk of harm due to the abandonment. The bank usually must provide some evidence that the home shows signs of abandonment, like the home’s doors or windows are broken, unclaimed mail and newspapers are accumulating around the home, or utilities—like gas, electricity, and water—aren’t turned on or being used.
  • The lender then must give the borrower written notice that it asked a court to declare the property abandoned. Usually, the bank may serve the notice personally, by mail, and/or by posting it on the property.
  • Sometimes the sheriff (or another party) has to visit the property and make a determination of the vacancy status.
  • Then, the court generally holds a hearing to decide whether the borrower has abandoned the home.

Most of the time, the foreclosure sale happens shortly after a court deems the home as abandoned. Once approved for a fast-track foreclosure, the foreclosure typically takes only a few months instead of, perhaps, years.

Downside to Fast-Track Foreclosure Laws: When the Borrower Still Lives in the Home

Fast-track foreclosures are only beneficial in cases where the home is actually empty. Unfortunately, though, sometimes banks pursue fast-track foreclosures without having clear evidence of abandonment. If you still live in your home, a fast-track foreclosure can be a big problem because it means you’ll lose your home much faster than normal. This deprives you of valuable time to work out an alternative to foreclosure, like a modification, or simply live in the home without making payments.

If you live in state with a fast-track foreclosure law and receive notice that the bank is trying to speed up the foreclosure—but you still live in the home—you’ll likely have to take certain actions to halt the expedited process.

  • Meet all deadlines. To challenge a fast-track foreclosure, you might have to submit written evidence or objections to the court within a certain time period, generally before a hearing.
  • Attend a hearing. Before a court will allow the bank to go forward with a fast-track foreclosure, it might hold a hearing to determine if you abandoned the home. If you don’t attend the hearing, the court will likely declare the home abandoned and allow the bank to fast-track the foreclosure. But if you go to the hearing and prove to the court that you still live in the home, you won’t lose it to an expedited foreclosure.
  • Give the court proper evidence that you didn’t abandon the home. To stop a fast-track foreclosure, you'll have to prove that you still live in the home. Generally, you’ll have to present evidence of non-abandonment, like the fact that you receive mail at the address, the utilities are in your name, and you have personal belongings in the home.
  • Make sure your home looks lived in. Again, courts generally consider certain conditions as signs of an abandoned home. So, to avoid a fast-track foreclosure, be sure to fix any broken windows, take care of the lawn, clean up any accumulated newspapers or trash on the property, and don’t disconnect the gas, electrical, or water services.

Also, don’t give the bank other evidence that you plan to abandon the home, like a letter or a phone call in which you state that you’re leaving or thinking about moving out of the home.

Talk to a Lawyer

In most cases, you won’t get a lot of time to fight a fast-track foreclosure. If you want to find out if your state has a fast-track foreclosure law—or if you receive notice that the bank is improperly trying to fast-track a foreclosure in your case—consider talking to a foreclosure attorney.

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