How to Negotiate With the Bank to Stay in Your Home After Foreclosure
Foreclosure is the point at which, usually with a court's authorization, a mortgage lender formally closes the loan and takes legal claim over the property. Usually the property is then sold either at auction or on the open market, and the mortgage borrower must leave. In some cases the borrower may be able to buy some extra time in the property.
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Instructions
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Check your state's redemption laws. Many states give homeowners a certain period of time after foreclosure to redeem the home. This means that by paying back the entire outstanding amount, plus a fee, you can regain full possession of the property. Of course this can be difficult as you'll need to find a source of funding or get a new mortgage elsewhere, but it may be worth looking into as it can remove the need to negotiate a longer stay.
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Research your state's foreclosure laws and look for the anticipated timescale. Also check any procedures the county sheriff -- or the equivalent official in your jurisdiction -- will follow if asked to forcibly evict you. While it's not a good idea to use threatening language when negotiating with the bank, it will be helpful if you know how long you can remain in the house before being forcibly evicted. A request for extra time that means you're still leaving sooner than if you played hardball is more likely to succeed.
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Contact the bank or its lawyers as soon as possible to make your request for extra time. If you wait until the home is sold by the bank, the new owners will want to move in as soon as possible. This greatly reduces the chances of negotiating an extension.
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Put your case calmly and professionally. Give specific reasons why you need to stay in the home and what you're doing to deal with the situation. For example, you can ask for time to put together a security deposit on a rented property. Make clear that you're not simply trying to drag things out indefinitely.
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Ask the bank to enquire whether the new owner is willing to rent the property, either for a set period or indefinitely. This may appeal to a buyer who'll use the property as an investment rather than a home, particularly one who plans to hold onto the property and wait for prices to pick up.
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Tips & Warnings
In some cases a bank may pay a small cash amount to the former owner if he leaves immediately, a tactic known as "cash for keys." However, the former owner should initiate such a deal by demanding or requesting money to leave.
Don't rely on being able to stay in your home after foreclosure. In most cases, the time you can stay in the home is at the discretion of the bank and its lawyers. However long you can stay in the home, it's in your interest to prepare for your inevitable departure.
