Relocating after Foreclosure: where to Set your Nest Next

Right after foreclosure, homeowners may feel extremely dislocated. Uprooted from their old homes, they will also have to face the bad music of bad credits, and the reality that they can no longer apply for home loans. Not in the next three to seven years, anyway.

It’s not the end of the world for homeowners suffering from the repercussion of foreclosure, though. There are still homes waiting for them across the states.

Home rentals

You won’t be able to buy homes in the several years because of bad credit, but that doesn’t mean you need to live in the streets. Depending on how much you have left after your foreclosure case, you can choose among the myriad of home rentals across the states.

Make sure, though, that this time you don’t overshoot your budget. Only go for rents that you can afford to pay for. Remember that you’re still waiting for your credit score to recuperate, and being evicted from your home rental is the last thing you want.

Filing for bankruptcy

If you find that you have absolutely nothing left in your account, try to see if you’re eligible for bankruptcy rights. Under the constitution, you should receive some sort of stipend to keep your head above water while you’re recovering from your bout with debt.

Make sure that you’re being absolutely honest when you file for bankruptcy, though. Don’t try to hide assets that you can sell to generate more income just because you want them saved.

Basic Tenant Rights during Foreclosure

As a tenant, it’s an absolute nuisance when your homeowner goes into a foreclosure and you’re asked to move out and look for a new home. Every state has different terms for tenants who are victims of foreclosure.

Fore example, tenants in Arizona who are evicted because of foreclosure are given only 8 days to vacate the premises. In California, on the other hand, the vacating period is longer. It can be as long as 60 days, depending on the agreement with the bank and/or the court.

The best you can do is to maximize whatever legal rights you have.

Demand for a Notice of Default

Prior to the foreclosure proper, lenders should have already disseminated a Notice of Default to all parties involved. This means that even before the foreclosure proceedings have taken place, the tenants should have already received a warning.

For more information about the notice of default, you can visit the Foreclosure Forum online.

Consider Suing for Damages

In any event that the homeowner refuses to recognize the term of lease, the tenant can immediately sue their landlord in the Small Claims Court. Tenants will at least be given relief for moving expenses, loss of security deposit, and a temporary home.

Cash for Keys

Sometimes the bank chooses to step in to make matters less messy. Let’s face it: facing legal matters is always dirty business. When the bank is in a hurry to have the home vacated for sale, they usually offer cash “relief” for tenant victims.

Aside from the keys of the house, the tenants also need to enter an agreement with the bank that they will not vandalize the place, steal any light fixtures, and/or leave “foreclosure pets” behind.

Why a Buy and Bail should never be an Option

Some homeowners feel that it’s only right to throw their old home straight into foreclosure and buy a new one because they feel tricked by mortgagers and/or banks. This is called a “buy and bail”.

While homeowners may feel that they’re emotionally on the right side of the court, it’s not exactly legal, and could be reason enough for a new lawsuit coming their way.

Buy and bails involve lies

When you go into buy and bail schemes, you essentially sign falsified documents and lie on load applications. Homeowners who attempt to do this can be facing serious cases of forgery.

This only means one thing: when you go into buy and bail schemes to try to get the better of your mortgager, you can end up behind bars.

Foreclosure always means bad credit

While you may think that going into a buy and bail helps you dodge the bad credit consequences of foreclosure, this is only temporarily possible.

Eventually, when your first home does go into foreclosure, all your other records will be scrutinized. In any event that the feds or your lender peeks into your buy and bail attempts, you will have to face forgery lawsuits.

Better option

It’s better to just face the consequences and accept your foreclosure penalties. Lenders are generally more forgiving when they see that the foreclosure was caused by grave circumstances like job losses or deaths.

How “Cash for Keys” Works

“Cash for Keys” is usually the bank’s last resort when they’re having a hard time asking tenants and homeowners of foreclosed homes to move out.

Instead of resulting to violent and combative means of evicting the homeowners or tenants, they offer cash in exchange for the keys of the house, and certain conditions.

What are the usually conditions included in the “cash for keys” deal?

Foreclosed homes usually suffer from vandalism because of hostile homeowners or tenants who were forced to move out. To avoid such circumstances, banks offer “relief” in exchange for the keys and certain amicable conditions.

The “cash for keys” deal requires the tenants to agree not to vandalize the home. They are also not supposed to remove any light fixtures in the home that may reduce its value. Also, in exchange for the bank’s “relief”, tenants and/or homeowners will have to leave with the “foreclosure pets”.

Cash at stake

There is no fixed amount pegged on a “cash for keys” deal. As a homeowner or tenant, the most you can expect is stipend for movers, rental trucks, utility deposits, and funds for a temporary home, like a motel room.

You should not try to extort money from the bank because you might be facing a huge lawsuit upon doing so. Instead, when the “cash for keys” option is offered your way, be gracious and comply.

Buying a New Home after Foreclosure

Individuals and families who recently lost their homes to foreclosure usually ask when they could be eligible to buy a new home again. The bad news is that foreclosures give you, as a borrower, a bad credit score.

This means that you probably won’t be able to take loans for several years. It’s best for individuals who have recently lost to foreclosure cases to look for homes for rent while the waiting period is still not up.

Waiting period for usual foreclosures

The waiting period for ordinary foreclosures with no extenuating circumstances is five to seven years. This is expected because this means that you’ve missed out on payments for no grave life events.

If you signed a deed-in-lieu of foreclosure, your waiting time may be shortened to four years.

Waiting period for foreclosures with extenuating circumstances

If the reason for your foreclosure is caused by a death in the family, a serious illness, a job transfer, or a serious injury which affected your ability to earn enough income, the creditors will be more forgiving. Depending on the gravity of your situation, you will only need to wait for three to seven years.

If you signed a deed-in-lieu of foreclosure, your waiting period may be shortened to two years.

Waiting period after a short sale

If you tried to dodge a foreclosure and opted for a short sale instead, you will be able to buy a new home in two years.