What Banks Can and Cannot Do Under Foreclosure Law

While each state’s foreclosure laws vary, there are certain fundamental things that banks may and cannot do throughout the foreclosure process.

For homeowners, the foreclosure process may be difficult and perplexing. News articles of banks acting inappropriately or unfairly foreclosing on houses have exacerbated the situation and alarmed many homeowners who are unable to make their mortgage payments. While each state’s foreclosure laws vary, there are certain fundamental things that banks may and cannot do throughout the foreclosure process.

What Banks Are not Able to Do

The foreclosure process may be difficult to understand, and many homeowners are uninformed of what banks can and cannot do. In certain circumstances, banks make unlawful moves on purpose, and homeowners are generally unaware.

Although each state’s foreclosure laws differ, there are several fundamental things banks cannot do throughout the foreclosure process.

In certain areas, banks are obligated to examine if the homeowner is eligible for a loan modification or other type of assistance before foreclosing on the house. If the bank decides to perform both simultaneously, this is known as “dual tracking.” Dual tracking is prohibited in certain states.
If you file for a loan modification or another kind of assistance, the bank will be unable to begin the foreclosure process. If the foreclosure process has already started, the bank cannot proceed if you seek for a loan modification or other type of assistance at least seven days before the foreclosure sale.
The bank cannot evict you without first obtaining a court order and filing an eviction.
If you are still living in the house, the bank cannot padlock the door. They must take the necessary actions to expel you from the premises.
If you restore your mortgage before the sheriff auction, the bank cannot continue the foreclosure procedure. To be reinstated, you must pay the amount you owe on your mortgage, plus any fees and expenses.

If you want to sell your property, you may use our property Ownership paperwork to finalize the transaction. We can also provide legal help on the foreclosure procedure.

What Can Banks Do

Banks have several rights under foreclosure law throughout the foreclosure process.

If a residence is unoccupied, banks may padlock it. Mortgages often include provisions stating that the bank has the right to take reasonable steps to defend its interest in the property if you decide to leave it.
Depending on your state, the bank may seek deficiency judgements if they are unable to sell the house at auction for the amount outstanding on the mortgage.
Depending on where the property is situated, the bank may seek a non-judicial foreclosure or a judicial foreclosure.
If the property is empty, the bank may seek a court order to reduce the redemption time to five weeks.

Keep in mind that regulations differ by state, but here are some broad guidelines for what banks may and cannot do throughout the foreclosure process. To learn more about the foreclosure process in your state, look into your local laws and regulations.