Recently, there have been an increase in reports of lenders entering homes pending foreclosure, changing the locks and removing personal property.
Often, the justification provided by the lenders is that they received a report that the property was vacant and unsecured and that they were simply securing the property by changing the locks and boarding up the property to safeguard the home from property damage, vandalism and theft. In reality, it is often a ruse to secure possession of the property prior to the foreclosure sale.
Here is a copy of a recent e-mail received from an attorney in Washington State:
Hello All - I have received several phone calls from different real estate agents reporting activity that I find hard to believe. If I had heard this story from one agent, I would have discounted it as them misunderstanding the facts. But, I have now heard it from a variety of agents . . . so, of course, now I am wondering if I have missed something. Apparently lenders (xxxx is the only name I have heard) are going into some properties that are pending foreclosure and changing the locks, removing personal property, removing listing signs and keyboxes, etc. All of this is happening prior to the trustee's sale. There has been no receivership or any other court proceeding. These are non-judicial foreclosures and lender is simply taking possession of the property prior to the trustee's sale. In at least one case, a homeowner called the police who came to the home and said that it was a civil matter and did not stop the lender's rep from then taking the homeowner's personal property (or so the story goes).
I can't speak to the legality of this type of action in other states. However, in Missouri, notwithstanding language in the deed of trust stating otherwise, the lender cannot enter an occupied home pending foreclosure. Even after the property is sold at a foreclosure sale, the lender or purchaser at the foreclosure sale, cannot enter an occupied residence and must file suit for unlawful detainer to secure possession of a property sold at foreclosure.
Although I have heard of isolated reports in other states (including Missouri), I am curious to learn if other real estate professional have heard of similar occurrences of this lender practice in their state?
This legal alert provided as a public service announcement courtesy of PREA Signature Realty.