A recent study estimates that 47% of foreclosed properties are still occupied.
You’re probably wondering “How is that possible?” and probably also super surprised because you’re not.
The thing that most people miss is that banks aren’t in the business to own homes.
What they love to do is loan people money. But when they have to foreclose on a house… the bank is forced to own the home until they’re able to sell it to get all or most of their money back… if they’re “lucky”.
But, what they had found is that when a New Jersey foreclosed house goes vacant… there is a much greater chance that the house will fall into disrepair or become “ugly”. Most of the time the bank would rather have you in the property even after you stop paying your payments and the foreclosure is started because it wards of vandals and other unsavory characters and keeps the house in good working order.
You may have seen a lot of talk in the media about people living for free after foreclosure – and even multiple stories about banks “abandoning” properties all together.
In those stories, people are avoiding house payments for months, even years. Fact: This was actually very prevalent in New Jersey during the last financial crisis.
Back to the point – At this point, you’re thinking “Man, that sounds great! Let’s all live for free.” (wink)
Wait… it can’t possibly be that simple, right?
No bank would purposely neglect to collect payments and abandon NJ properties. The only way that you get to live without making any payments is when some major mistakes were made.
But you might legitimately get lucky! It’s possible, and it’s happened before. However, it’s not exactly legal to avoid payments that you owe, and it can get you in serious trouble and potentially have huge consequences on your credit.
So why are so many foreclosed homes still occupied? It’s important to remember that no one wants the house to be vacant. Vacant homes are targets for vandalism and crime.
Staying in the property can help the bank maintain the value of their investment, so it’s actually in their best interests to keep it occupied and “safe”. Partly because of the ways that the foreclosure laws are structured in NJ, banks may ask you to leave while wanting you to actually stay.
There are a few perfectly legal ways to remain in your home, even after foreclosure. Let’s dive in…
How To Stay In My Home After Foreclosure In New Jersey
Not all these options are available (depending on your situation and your lenders), and you’ll need some expert advice along the way to help you get through – We recommend a good lawyer who understands the foreclosure process.
1) Wait it out. Honestly, this is a pretty bad option, but it seems to be increasingly common and the most passive. You definitely shouldn’t run away and abandon your house when the first notice of default shows up. Remember that the proceedings and the process takes months and sometimes a good amount of years. It’s not over until it’s over, so don’t give up too early. On the other hand, don’t wait until the sheriff shows up to evict you to start packing up your stuff.
2) Go to court. In very rare cases, judges are granting stays and delaying evictions. This is really only a valid option if you (and your attorneys) can prove that the bank has neglected a legal requirement during the foreclosure process or ultimately screwed up. During the past few years, a lot of fraudulent behavior at banks has been uncovered – so we may see an increasing trend of using the NJ courts to stop foreclosure. Fighting banks with lawyers is very difficult, super expensive and time-consuming, even if you’ve got a perfect case (most people don’t really stand a chance).
3) Propose a move-out bonus. Often buyers of occupied foreclosure properties spend thousands of dollars on lawyers and other costs of eviction, so why not save everyone the time and expense by taking some of that money yourself? It’s known as “cash for keys”. It sounds a little greedy, but greasing the wheels does help everything to run smooth. Plus, you can help out the bank and the buyers by not abandoning the house to squatters before they’re ready to take possession.
4) Rent it back. It may sound crazy, but some banks may be willing to take on previous homeowners as tenants in their property. That’s only a short-term fix, as they’ll want your agreement to vacate the premises as soon as they find someone to purchase the property. In some cases, we can even purchase the property and rent it back to you if you so wish.
It’s really good that you’re reading this page and exploring your options. We help homeowners like you to find creative solutions to unfortunate situations like this.
We can’t help everyone, but we might be able to help you.
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