Foreclosure is a stressful event whether you own the home or just live there as a tenant. You may have some help available to you to cover costs associated with moving and finding a new place to live if you're living in a foreclosed home. How long you have to move and what help options you'll receive depends on whether you're the borrower or a tenant, the foreclosure procedures in your state and your lender's policies.
Cash for Keys
Under a "Cash for Keys" incentive, lenders who own the foreclosed home offer you money for moving costs as long as you leave the property voluntarily and in good condition. The incentive is aimed at preventing property damage and avoiding the need for the lender to formally evict you. The lender is stuck with property costs, such as taxes, until it can sell the home. Property damage makes it harder to sell the home and formal eviction can take months, increasing the lender's losses. A third party winning bidder in a foreclosure auction might offer you a similar incentive for the same reasons a lender would.
Reimbursement Amounts and Coverage
Reimbursement amounts vary by lender and situation. Your estimated moving costs come into play when the lender calculates a figure and you may have a chance to negotiate. You often can receive money for moving costs and security and utility deposits on a new place. The lender may cover the expense of your temporary living space, such as a motel room. You should get any moving incentive agreement in writing so you have legal proof of what was promised and know what is expected of you.
In a short sale, you're selling your home for less than what you owe the lender. In return, the lender forgives the balance on your mortgage instead of taking you through a foreclosure. Under the federal government's Home Affordable Foreclosure Alternatives program, which provides short-sale procedures for lenders and homeowners, you're entitled to $3,000 in moving expenses as long as you leave the home in good condition.
Tenants under a valid lease in a foreclosed home have the right to stay after the foreclosure until the lease term expires under federal law. For example, if you have a one year lease from March of 2013 to March of 2014 and the lender forecloses on the landlord in September of 2013, you will have until the end of March of 2014 to move. You pay your rent to the property's new owner, whether it's the lender or a different party, and still must follow the lease rules. You still have 90 days after the foreclosure to move even if you didn't have a lease. However, you can choose to take a cash incentive and leave early if the new owner will release you from the lease or if you didn't have a lease to begin with.
Anna Assad began writing professionally in 1999 and has published several legal articles for various websites. She has an extensive real estate and criminal legal background. She also tutored in English for nearly eight years, attended Buffalo State College for paralegal studies and accounting, and minored in English literature, receiving a Bachelor of Arts.