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The bank can change your locks before foreclosure. (What’s In Your Mortgage?)

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by Mike on February 25, 2010

Locked out

Imagine this: you’re on a two-week vacation. You come back, and find a notice on your door:

Entry by unauthorized persons prohibited.

Alarmed, you try your key in the lock – it doesn’t fit. You peek through the windows and see that everything you left behind is gone – your furniture, your clothes, your photographs – everything.

You’ve been a victim of your mortgage.

Protection for the bank but not for you

At issue is a clause in most mortgages that allows the bank to “protect its interest” in the “security” pledged for the loan – in other words, your home. If the bank, or its inspectors, decide at any point that you’ve “abandoned” the home, they claim the mortgage gives them the right to change the locks, board the windows, drain the pipes, and clean out any trash.

Here’s the language most commonly used in many Florida mortgages:

9. Protection of Lender’s Interest in the Property and Rights Under this Security

Instrument. If (a) Borrower fails to perform the covenants and agreements contained in this Security Instrument, (b) there is a legal proceeding that might significantly affect Lender’s interest in the Property and/or rights under this Security Instrument (such as a proceeding in bankruptcy, probate, for condemnation or forfeiture, for enforcement of a lien which may attain priority over this Security Instrument or to enforce laws or regulations), or (c) Borrower has abandoned the Property, then Lender may do and pay for whatever is reasonable or appropriate to protect Lender’s interest in the Property and rights under this Security Instrument, including protecting and/or assessing the value of the Property, and securing and/or repairing the Property.

Securing the Property includes, but is not limited to, entering the Property to make repairs, change locks, replace or board up doors and windows, drain water from pipes, eliminate building or other code violations or dangerous conditions, and have utilities turned on or off. Although Lender may take action under this Section 9, Lender does not have to do so and is not under any duty or obligation to do so. It is agreed that Lender incurs no liability for not taking any or all actions authorized under this Section 9.

What does this mean? It means that the bank decides you’ve “abandoned” your home – or in some cases, simply gone on a vacation that’s too long for their tastes – they can come in and take complete possession of your home, without foreclosing or even giving you prior notice.

The banks argue this language is needed to protect the property in the event someone walks away from the house. But what protections are there for a homeowner whose house has been improperly seized?

None… because you’ve agreed to let them do it. Of course, if challenged, many banks will attempt to fix a problem they cause by seizing a house that’s not really been abandoned, but sometimes there’s no way to fix the harm they’ve done. How do they give back irreplaceable photos or mementos? How do they restore your sense of security in your own home? There’s probably not enough money they can throw at you if this happens.

So be careful when you sign that mortgage. You might just be handing the bank a key to your house without realizing it.

Read the whole “What’s In Your Mortgage” series here.

( Photo Source / Photo Rights )

Want to know more? Contact us at Ricardo & Wasylik, PL.

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