Foreclosure

Surprisingly, this happens with some fair frequency. Probably 80-90% of the time, a homeowner who stops making their mortgage payment can expect to receive a sheriff’s sale notice within 3-6 months of when they stop making payments. There are various reasons that some mortgage companies take substantially longer than that, & sometimes it seems like they’ll never foreclose. For some people, this isn’t a problem at all – their house is usually upside down anyway, & they’re enjoying the benefit of free living. But sometimes people have moved from the house, and want it to go away & out of their name, particularly if there is an ongoing association fee.

My colleagues have various suggestions on what to do in this instance. You can try to do a deed in lieu of foreclosure, which may not be fully effective, and/or you can try to do a short sale, although I’m not a big fan of that, as explained in a prior post. But I have another suggestion, which applies to people who have moved out of their house. I should also note that this assumes you are not in an active bankruptcy, nor are you contemplating bankruptcy:

You can just rent the house out. I would still recommend being fully up front with a prospective renter, and under the circumstances you might need to negotiate a slight reduction in market rent, although some people prefer the flexibility of month-to-month lease and will actually expect to pay more for that flexibility. One thing you want to watch out for, is to ensure there is not an “assignment of rents” clause in the mortgage, because if there is, you might need to subsequently turn over the rents you had collected.

If you don’t want to be a landlord and just want to cleanse your hands of the property, a property manager such as myself may be willing to take the property off your hands, so that you can move on, again, particularly if you have ongoing association dues which remain a personal obligation (unlike property taxes, which just go with the property).

As stated elsewhere on this site, I can’t “advise” people to take a course of action and be responsible for consequences, so if you would like more information on these options which is tailored to your individual circumstances and that you can rely and act upon, feel free to contact me.