What Banks Can't Do
The foreclosure process can be tricky to navigate, and many homeowners are unaware of what the banks can and can't do. In some cases, banks make an illegal move intentionally, and oftentimes, homeowners are none the wiser.
Each state has its own varying foreclosure law but there are some general things banks can't do during the foreclosure process.
- In some states, banks are required to determine if the homeowner qualifies for either a loan modification or some other form of help before they foreclose on the home. If the bank chooses to do both at the same time, this is referred to as "dual tracking." Dual tracking is illegal in several states.
- If you apply for a loan modification or another help option, the bank can't start the foreclosure process. If the foreclosure process has already begun, the bank can't continue if you apply for a loan modification or another form of help providing you apply at least seven days before the foreclosure sale.
- The bank cannot kick you off of your property without first getting a court order and filing an eviction.
- The bank cannot padlock your home's door if you're still living in the home. They must take the proper steps to evict you from the property.
- The bank can't continue the foreclosure process if you reinstate your mortgage before the sheriff sale. In order to reinstate, you will need to pay the amount you are behind on your mortgage plus any fees and costs.
What Banks Can Do
Under foreclosure law, there are some things that the banks can do during the foreclosure process.
- Banks can padlock a home if the home is vacant. Mortgages often have clauses that state that the bank has the right to take reasonable action to protect their interest in the property if you decide to abandon it.
- Depending on the state you live in, the bank may pursue deficiency judgments if they are unable to sell the home at auction for what they are owed on the mortgage.
- The bank may pursue a non-judicial foreclosure or judicial foreclosure depending on where the property is located.
- The bank can pursue a court order to shorten the redemption period to five weeks if the property is vacant.
Keep in mind that laws will vary from state to state, but these are some general things that banks can and can't do during the foreclosure process. It's important to research your local laws and regulations to find out more about the foreclosure process in your state.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.