A recent study estimates that 47% of foreclosed properties are still occupied.
When you first see that stat you may be surprised… but we’re not.
What most people don’t realize is that banks aren’t in the business to own homes.
They are in the business to loan people money.
Generally speaking, the bank has no interest in taking possession of the property. However, they can’t afford to sit back and not collect on the money the lent out as they are paying interest to their customers who keep money deposited with them.
Therefore, they have to initiate the foreclosure process on a house and sell it in order to get back the money they lent on it.
Banks know when a Chicago foreclosed house goes vacant… there is a much greater chance that the house will fall into disrepair. Often times 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 keeps the house in good working order.
During the great recession there was a lot of media attention around people living in their home after foreclosure and even some stories about mortgages lost in the shuffle.
Of course, there is some truth to them but they are typically very exaggerated on the details and definitely not anything you can reasonably expect.
Man, that sounds great! Let’s all live for free. (wink)
Wait… it can’t be that simple, right?
No bank would purposely neglect to collect payments. The only way that you get to live without making any payments is when some major mistakes were made.
It’s possible, and it’s happened before but so is winning the lottery. Remember, it’s not exactly legal to avoid payments that you owe, and it can get you in serious trouble.
In IL the bank can actually seek to obtain a deficiency judgement against you for any money they lost when selling your property. You’ll suffer the effects of having this judgement on your credit report and the possibility of them garnishing your wages in the future to collect on it.
So why are so many foreclosed homes occupied? It’s important to remember that no one wants the house to be vacant. Vacant homes are targets for vandalism and crime.
It is also important to remember that the foreclosure process takes time. There are a series of steps that must be performed over time before the bank is able to offer your property for sale at the public auction.
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. Partly because of the ways that the foreclosure laws are structured in IL, banks may ask you to leave while wanting you to stay.
There are a few perfectly legal ways to remain in your home, even after foreclosure.
How To Stay In My Home After Foreclosure In Chicago
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.
1) Wait it out. Honestly, this is a pretty bad option, but it seems to be increasingly common. 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 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. 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 courts to stop foreclosure. Fighting banks with lawyers is very difficult, expensive and time-consuming, even if you’ve got a perfect case (most people don’t 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 are 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.
It’s really good that you’re reading this page and exploring your options. We help homeowners like you to find creative solutions.
We can’t help everyone, but we might be able to help you.
We buy local Chicago IL houses like yours from people who need to sell fast.s