When you’re a homeowner and you’re still living in your home, the mortgage company can’t legally lock you out. This is true even if the company starts to foreclose on the real estate or sells it in a foreclosure sale. Until the foreclosure proceedings are complete, you still own the home and have the legal right to live there.

Since you still own the home, you can legally take certain actions. For instance, you can remove the mortgage servicer’s padlock and replace it with your own lock. That said, if you’re a tenant rather than the homeowner, you may not have the right to do this, depending on your state’s laws. It’s best to reach out to your landlord instead of cutting the locks. 

You also can reach out to the servicer and tell them that you haven’t abandoned the property, so they need to treat it as an occupied home. If a field services company leaves their contact information, reach out to them as well. You also have a right to contact a foreclosure attorney.

How To Prevent Foreclosure and Keep Your Home

There are some actions you can take to prevent a foreclosure all together, so you don’t have to worry about your locks being changed. If you want to keep your house, contact your lender as soon as possible to ask about loss mitigation options. These options may include:

  • A loan modification program, which allows you to negotiate a change in the loan terms;
  • A forbearance period where you don’t have to make payments for a few months; or 
  • Refinancing to get a new loan to pay off the current mortgage. Typically this loan will be lower and have a better interest rate. 

You can also try negotiating a repayment plan. Under such a plan, your lender may temporarily increase your mortgage payments so you can make up the past payments that you’re behind on. You might also consider filing Chapter 13 bankruptcy, which gives you 3-5 years to make back payments on loans. 

How To Prevent Foreclosure Even if You Lose the Home

If you can’t find an option that will work to help you keep your home, you can still avoid some of the damaging effects of foreclosure. It’s best to avoid foreclosure at all costs because it will hurt your credit. To decrease the hit to your credit score, first see if the bank will do a deed in lieu of foreclosure. In this arrangement, you give the deed to your home to the bank and they agree not to do a traditional foreclosure in exchange. While this will still hurt your credit score, it will have less of an impact than a regular foreclosure. There may also be tax consequences if the lender forgives any portion of your debt.

You could also try to do a short sale, where you sell your home for less than what you owe on the mortgage. Sometimes banks will even forgive the outstanding balance. Like a deed in lieu, this may come with tax consequences. Your lender will need to approve the short sale process though. Similarly, you may be able to just do a regular sale, where you sell your home and the money you get pays off the mortgage completely.

A1 Lock and Safe

Our Chapel Hill and Durham locksmiths provide a wide array of commercial locksmith services, everything from locking commercial foreclosures to providing master keys for hotels and motels. Our technicians also offer re-keying services for properties that have been recently purchased as well as for businesses that have had a change in personnel. We also install door closures to prevent doors from being left open.

Ensure your foreclosed properties are protected with A1 Lock & Safe… ensure your foreclosed properties are protected by re-keying your locks. Call 919.471.1111!