It’s not home invasion, it's in the mortgage...

Every now and then a story like the one that appeared February 14th in the Buffalo News comes along to remind us that no matter how outrageous the act may be, banks have the right to a form of hme invasion under the provisions of the mortgage. OK, maybe that term is a bit outrageous, too; however the story seems to support the homeowners’ claims that their mortgage company entered their house without their permission and threw away a bunch of their stuff (they called it a ‘Trash-out” of the home), even though the home was not yet in foreclosure. They got most of the stuff back, by the way. Read the whole article at http://www.buffalonews.com/business/article341101.ece

The banks said, “Oops, sorry about that”, but claims to have the right to enter the home and protect their own interests in it, since the sellers had moved out. The sellers had moved to another state almost a year earlier, but claimed to be keeping the property up and paying utilities and taxes, even though they were behind on the mortgager payments. The sellers claim that they had been trying to negotiate a short-sale of the property and had not abandoned it, even though they were behind on payments and technically in default.

One of the points that is made in the article was that banks do, in fact, have the right to enter homes upon which they hold mortgages, if they have sufficient reason to believe that the home has been abandoned and that their interest in the property may be at risk from vandals or thieves. I’ve hit this locally many times and have had to tell delinquent owners who’ve called me for potential short-sale advice and listing to be on the watch for the vultures that the banks hire to circle delinquent properties to see if they are abandoned. Once you are delinquent, you can’t even afford to go away for along weekend, for fear that you’ll come home to a house with changed locks than may have been “trashed out”.

So, apparently, if you have a mortgage and somehow get behind on your payments your home is subject to being entered and worse by your bank, because you apparently agreed to that in the fine print of the mortgages that no one ever reads. The message from the bank is – “Don’t go hollerin’ rape if you agreed to the arrangement in the mortgage at the front end.”

The homeowners in this case have sued everyone in sight and a few parties that were just peripherally involved, so we’ll see eventually what the courts say about all of this. In the mean time the bank involved and the property management company that entered the house and trashed it out on the bank’s orders are trying to do PR damage control and promising better reviews and controls against future mistakes – all the while still claiming to have had the right to do this to protect the bank’s interest.

I’m sure that each state probably has laws or guidelines in place to govern when and how a bank can do this type of thing. In Michigan it starts with posting an abandoned property notice that gives the owners 48 hours to call the bank (or it’s property management company) and make the case that the place is not abandoned. That’s why vacations are risky for homeowners in default. I’ve had to watch more than one short-sale house on behalf of homeowners who had to be absent and had one case where I needed to call them on vacation so that they could call the wolves off before they changed the locks.

I’m not totally against the banks having this right to protect their interests, if indeed the property has been abandoned; however, many banks forge deals with really sleazy operators out in the field and don’t seem to have much of an oversight process in place to make sure that this type of things doesn’t happen. It gets back to the thought that these distressed properties are just “assets” to the bank and not thought of as someone’s home. So, even if I somehow agreed to it in the mortgage documents; I’d still feel violated if you did this to me.