sdr thank you for the correction. I was incorrect but from what I was reading the lender has to show abandonment by a court action. Is that true or is no court action needed? I also read that the lender CAN indeed change the locks but cannot infringe on the right of the homeowner to attempt to sell the home or gather belongings from the home as well until the bank indeed holds title. Thus the homeowner can cut the locks off to gain access or attempt to sell the home prior to the trustee sale.
Here is the clause from Fannie Mae
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. Lender’s actions can include, but are not limited to: (a) paying any sums secured by a lien which has priority over this Security Instrument; (b) appearing in court; and (c) paying reasonable attorneys’ fees to protect its interest in the Property and/or rights under this Security Instrument, including its secured position in a bankruptcy proceeding. 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.
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However then it seems that there is also a potential for liability based on the definition of abandonment, a home may have been vacant, but that is not the definition of abandoned. Typically for a property to be consider abandoned it has to be not only obviously vacant and no sign of anyone being there for some time but the property is usually also not liveable as one or more utilities are off (heat, water, electric). Furthermore standard operating procedure is that if personal items remain and they have a value of over $300 they are left where they are or moved to a central place on the property and a notice is posted for the owner to reclaim them in 30-60 days (varies by state) Also there has to be no effort made by the owners to work with the lender.
Anyways this is just my understanding but you were absolutely correct on this and it sounds like you are working on such a case right now. Thank you for the correction as it is good to know and I had not run across it.
