Eviction is Next Step after the Auction
Eviction looms after the gavel strikes at a foreclosure sale.
Prepare early for your move to a new home. The new owner can start legal eviction procedures, which can only take a matter of days. A lawyer who is knowledgeable about foreclosure evictions could help delay the foreclosure sale and keep you in your house longer. It's a good idea to speak to a local attorney before the auction. (You can present your case, for free, by contacting LegalMatch.)
Filing bankruptcy will stop an eviction, even if your petition is filed minutes before the sheriff arrives. You may eventually be evicted--but it will be weeks, perhaps months later. Speak with a bankruptcy attorney to see if this option is appropriate in your case. (You may also want to read my page on Foreclosure Prevention with Bankruptcy for more information.)
After a judicial foreclosure you cannot be evicted during the redemption period. Redemption is discussed earlier.
(NOTE: If you think you were wrongfully foreclosed you may soon be entitled to a review and possible compensation.)
If you don't leave your house after it sells at a trustee's auction, the lender can have the sheriff evict you through a process called "unlawful detainer."
The unlawful detainer process is the same used by a landlord to evict a tenant--you are now a holdover tenant in the lender's house.
What is a notice to quit?
The purchaser at a foreclosure sale must serve the occupants with a Notice to Quit before filing an eviction lawsuit to gain possession of the property.
If the occupant is the former owner or a tenant of the former owner, a 3-Day Notice to Quit is required. If the notice period expires and the occupants have not left, then the new owner may then file an unlawful detainer. (The eviction process is different in each state).
Even having an eviction lawsuit filed against you can damage your credit. It may be better to leave voluntarily than face eviction. Many landlords and apartment managers will review your credit before accepting you as a tenant. You should monitor your credit score before looking for a new home. If your score is especially bad you may want to limit your search to small residential landlords who don't check credit.
Ask for time to move out
It doesn't hurt to ask for extra time to move out. If you have taken fairly good care of the house, the buyer may keep you on as a caretaker until the buyer's plans for the property can be finalized. If the buyer wants to remodel for instance, it could be several months before plans are approved. During that time the house will be vacant and an occupied house is less likely to be vandalized or have other problems. And be sure to ask for cash for keys!
Additional Protection for Renters
In a bill recently passed by Congress and signed by President Obama renters with month-to-month rental agreement must be given 90 days notice before they can be evicted. Renters with leases are allowed to stay in foreclosed home until their lease expires(unless the foreclosed property is sold to a bonafide purchaser, in which case they must be given 90-day notice.)
In 2008 the California legislature passed Senate Bill 1137. That bill gave tenants who are affected by foreclosure an additional 30 days notice before they could be evicted. They now must be given 60 days. This law however is superseded by the more stringent 90-day federal rule.
Considering a Short Sale?
A short sale can substantially reduce the amount of time you can live in your home. With a short sale, once your house is sold you need to move out so the new owners can move in. On the other hand, if you decide to let your lender foreclose you can't be evicted until your home has been auctioned. This can sometimes be many months after you stop paying your mortgage payment. Even after the auction, you may be able to negotiate "cash for keys" and get paid to move out. Remember a short sale can result in income taxes. Learn more here.If you have received a 1099C (reporting cancellation of debt income to the IRS) visit my tax resolution website to learn more about dealing with the IRS.
Fannie Mae and Freddie Mac Procedures
Two of the largest guarantors of mortgages, Fannie Mae and Freddie Mac, announced changes to their policy towards renters who are victims of foreclosure. The proposed plan is to let renters living in foreclosed houses to sign leases with Fannie or Freddie while the property is for sale. As a renter, you are allowed to either accept "cash for keys" or sign a new month to month rental agreement with Fannie Mae or Freddie Mac. They will not seek credit reports. Keep in mind, that you will either have to vacate the house when it is sold in foreclosure (or be evicted). You can find Fannie Mae's official policy at the bottom of this page (as a PDF attachment.)