With the increase in foreclosure proceedings, the question will invariably come up: "Do I need to move after I receive a foreclosure notice?" Conventional wisdom has generally been to stay in the house until you receive the notice of the sheriff's sale. However, even moving out at that point may not be in your best interests. The answer to the question really will depend on your particular circumstances, but keep the following issues in mind:
- Will moving out diminish the value of your house? Some people don't seem to care anymore after getting a foreclosure notice, but keep in mind that you may be on the hook for any unpaid mortgage balance after the home sells. As a result, you really want the house to sell for as high a price as possible, even after foreclosure. If you leave the house early, the house is more likely to be the target of thieves or squatters. Abandon houses often end up with missing fixtures, pipes, and any other items (include building materials) that can be used or sold by thieves.
- Do you have anywhere else to go? If not, staying in the house as long as possible will be helpful. Although you may not be able to pay the full amount of your mortgage payments, maybe you can save enough to at least pay the upfront costs (i.e., first month's rent, security deposit, etc.) for an apartment or rental home.
- What if the lender doesn't follow through on the foreclosure? This may never have crossed your mind, but more often than ever before, lenders are "walking away" from foreclosures. As a recent article from MSM explained, "bank walkaways" create issues that you need to consider before moving out of your home. For example, if the lender doesn't take possession of your home or doesn't complete the foreclosure, you may continue to be liable for property taxes, home insurance, homeowner association dues, and building code violations. As a result, you may be better off staying in the house and trying to work with the lender to modify the mortgage loan.
No matter what situation you find yourself in, don't just ignore the situation. Walking away from the house may end up costing you much more than you ever realized. Keep in touch with the lender (or loan servicer), see if the lender is going to follow through on the foreclosure, and make sure you can find another place to live. If the time comes to either fight the foreclosure or file bankruptcy, find an experienced counselor or attorney to help you.
