Neighbor foreclosure
September 21, 2013 9:54 AM   Subscribe

What can we do in preparation for our neighbor's foreclosure?

Our next door neighbor has indicated that they will be walking away from their home in the next 2 weeks. I've had my suspicions for a while since they had said they were moving to a foreign country about 6 months ago but have done absolutely nothing about selling their house in the mean time. This morning we asked them directly what their plan was and one of them said "I think we're going to walk away." since it's likely they would have to sell at a loss. One of the owners is already out of the country and the other is leaving in 2 weeks. We're on good terms with them and would like to figure out what, if anything, we should do before they leave to make it easy for us to maintain the property in some basic fashion until the bank process catches up. (Also, how long will it be before the bank takes it over and resells it on average?)

We're in California.
posted by otherwordlyglow to Work & Money (29 answers total)
You shouldn't do anything. If you want to keep the lawn mowed, I doubt anyone will complain, but this is not your problem.
posted by tylerkaraszewski at 9:58 AM on September 21, 2013 [6 favorites]

What Tyler said. Mow the lawn, make sure the delivered mail is not left sitting out front for possible burglars to notice. Just treat it like the neighbors are on vacation.
posted by Fukiyama at 10:00 AM on September 21, 2013 [3 favorites]

We're thinking of asking if we can take over the electricity and water. I wouldn't mind the small expense if it meant the house looked lived in.
posted by otherwordlyglow at 10:03 AM on September 21, 2013

Check with your municipal government to see what responsibilities their bank/mortgage-holder will have to maintain the property. It may be a more efficient use of your time to bug that entity to do the things that keep a house from dragging the neighborhood's property values down.
posted by Etrigan at 10:16 AM on September 21, 2013 [6 favorites]

If you've ever wanted to do anything to your yard that would require your neighbor's consent, like removing a fugly fence between your houses, now's the time to do it.
posted by zippy at 10:16 AM on September 21, 2013 [19 favorites]

We're thinking of asking if we can take over the electricity and water. I wouldn't mind the small expense if it meant the house looked lived in.

I'm not sure that's a great idea. The bank, when it takes possession of the home, will be legally obligated to cover its maintenance; they may well hire a third party contractor to do so. If so, one of the first moves those folks will make is to change the locks. If there's a problem inside the house with the utilities, what do you do?

What you don't want to do is get in a situation where you're out several hundred bucks over the course of months with no way to get it back from the bank, or the maintenance guy or the realtor finds you over there and gets you booked for trespass. Further, if there is real trouble with the house, you definitely don't want that to be your problem --- if the pipes freeze and flood the basement, you really want that bill going to you? What if a squatter or a thief zaps themselves on a live wire, when the bank thought the utilities were cut off? I have no idea what the liabilities would be there, though I expect it might be quite expensive, legally speaking, to find out. Either way I bet your homeowner's insurance doesn't cover it.

Sure, all of these might seem like remote possibilities. But on the other hand, they're all really bad. Best case scenario is you spending $200 bucks in order to make sure the lights are on for a few weeks, and then having to extricate yourself from a weird situation when the house does get sold. To me this seems like all downside.
posted by Diablevert at 10:18 AM on September 21, 2013 [9 favorites]

I would worry a little bit that if they noticed, the bank would start sending water trucks to fill there or some other obnoxious shit, or it would somehow be construed as "the neighbors have agreed to pay all water and power bills in perpetuity" and you'll have to spend $25K on lawyers to get them to stop insisting on it.

Because "bank" = "evil fuckhead."

I might find a list of what condition the bank is legally required to keep the house in, and what if any services it's required to maintain, so you could zealously and repeatedly insist on their full compliance and keep calling the county/city/town/etc every time you notice the slightest infraction.
posted by ROU_Xenophobe at 10:19 AM on September 21, 2013 [14 favorites]

If your location info on your profile page is still correct, then you can contact your supe's office (John Avalos - good guy, but with an autoplay video on his page!) and someone in constituent services will probably be able to give you information about what the bank is obligated to do in terms of property upkeep, and how and to whom to bitch if the bank isn't doing what's supposed to do.

Do not take over water/electricity. Do find out who their mortgage lender is, so you know who to complain about and to.
posted by rtha at 10:29 AM on September 21, 2013

We're no longer in Avalos' district but close. I guess when one says "contact the bank" somehow we need to find out what bank holds the mortgage. Can we do that on our own or does the neighbor need to tell us?
posted by otherwordlyglow at 10:37 AM on September 21, 2013

This from sfgate might help. It's probably faster and easier to ask your neighbor.
posted by rtha at 10:52 AM on September 21, 2013

Honestly, this isn't your business, and taking over the utilities (!) just sounds like a bad idea all around. Imagine you pay to keep the water on.... now imagine someone goes in there to steal the copper pipes, causing water to go all over the place and resulting in extensive damage; or maybe they damage the wiring yanking out the applinces and that causes an electrical fire. Who do you think the bank is going to sue for that damage?!? Sure, go ahead and maybe mow if you really want to, and throw out visible trash like newspapers, but nothing more.

There are lots of other ways, besides the lights, that people can use to tell it's empty: everything from the "for sale" sign that'll be on the lawn to the real estate company's online listing service.
posted by easily confused at 11:49 AM on September 21, 2013 [5 favorites]

I wouldn't mind the small expense if it meant the house looked lived in.

So you're concerned about security, is that it? How far away from your house is this other house? And how far is the neighbor on the other side? If you're talking a couple car lengths, I wouldn't worry too much about it. Keep an eye open. Maybe alert the other neighbors to do so also. But don't worry about it.

And sure, if you're worried about it being unsightly, you're probably safe if you want to trim the lawn now and then, but find out who takes title and just talk to them about your concerns.
posted by AnOrigamiLife at 12:30 PM on September 21, 2013 [1 favorite]

Why do you want to maintain something that it is someone else's responsibility to maintain? Doing your neighbor a favor is one thing, but doing the lienholder a favor?

I think if you're worried about security, your best options are 1) call the police if you see anything worrisome, 2) contact your town or city if the place becomes an eyesore.
posted by zippy at 12:42 PM on September 21, 2013 [1 favorite]

Talk to your neighbors, ask for their mortgage info, and consider making an offer when it comes up for foreclosure sale. Heck, even ask for keys, in case of trouble at the house. If they literally walk away, you might want to notify the mortgage holder, so maintenance can start asap.

You can mount motion-sensitive lights on your house that illuminate their yard, which might help deal with unwanted visitors.
posted by theora55 at 1:10 PM on September 21, 2013

I work for a mortgage company specifically dealing with properties in foreclosure or pre-foreclosure.

Don't do anything. The mortgage servicer will know it's vacant within 30 days by doing drive-by appraisals. They will then have a vacant property management company who will do whatever is minimally necessary to prevent any desctruction of property (securing locks, possibly boarding stuff up depending on the area). You have no reason or need to get involved. Depending on how long it's been since your neighbors quit paying their loan, the property may already be in foreclosure, but in Cali it can still take anywhere from 6 months to a year for it to finally go to sale.

And re someone above's comment, no, there's no way you'll be held responsible for their utilities or anything of the sort. Out of all the bank-and-mortgage related screwups I've seen (and I've seen quite a few), that particular concern is nonexistent. Just leave it be.
posted by celtalitha at 2:14 PM on September 21, 2013 [1 favorite]

Also - if you maintain the house and yard to look lived in, it will actually take LONGER for the mortgage servicer to take over, because they will assume it's still occupied, and they will continue trying to contact the borrower for workout options, because in California there are specific and complicated processes a lender has to follow in exhausting all potential workout options with a borrower who may still be interested in keeping the property. If the property is obviously vacant, that actually helps speed things up and simplify things. Which is to say: you'd be doing a favor neither for your neighbor OR for the lienholder, actually - the bank/mortgage servicer is spending more money doing drive by BPOs and paying lawyers to attempt to mail certified letters to someone who appears to still live there and really doesn't. Not a good idea for anyone.
posted by celtalitha at 2:19 PM on September 21, 2013 [6 favorites]

Do you have a Home Owners Association? HOAs often have a right of abatement, where they can go onto a property and do maintenance and whatnot in the absence of the owner (for exactly this sort of scenario).

If you do have an HOA, make sure that they're aware of the imminent foreclosure so that if the place will be vacant for awhile, they can arrange for the yard to be cut and maintained.
posted by jquinby at 3:18 PM on September 21, 2013

Before they leave ask if you can mount battery-powered motion-sensitive lights over their doors (I assume you will have to pay for them) so that if anyone approaches the house at night they will hopefully be deterred.
posted by saucysault at 3:40 PM on September 21, 2013 [1 favorite]

In my neighborhood, it was customary for neighbors to mow each other's lawns if one person was mowing and the other neighbor's grass was looking long. That, plus snow shoveling, would probably be the extent of my interference in the problem.

I might be tempted to add lighting to my own house that "accidentally" lit up the other house fairly well. I would also go and clean up any flyers and circulars that might appear on the porch.

If you notice mail piling up, call or stop by the post office to remind them to do what they are supposed to do regarding full mailboxes.
posted by gjc at 4:17 PM on September 21, 2013

To answer a few questions - the house is attached to ours on one side, as is their neighbor on the other side. We don't actually share a wall but they physically touch. There is no HOA.

I don't understand celtalitha's comment about a drive-by appraisal determining the vacancy within 30 days. Are you suggesting that as a matter of course, someone is driving by every single property with a mortgage every month? How would that even work?

As far as I know they are not behind in their mortgage (yet); they just don't see any reason to keep paying it once they've fully vacated so presumably it could take months before actual foreclosure proceedings start. Would it help if the current owners notified the lender of their vacancy and signed over the deed or something like that?

I know of people who had this exact same circumstance in another county and it was 2 years before the property was finally sold at auction and in the mean time, squatters came in, the electrical systems were stripped, and the property generally fell into disrepair and there was nothing the neighbors could do about it.

We don't have any immediate plans to sell our house but living next to a foreclosed property isn't really great for our property value so that's a consideration, too.
posted by otherwordlyglow at 4:47 PM on September 21, 2013 [2 favorites]

Strategic default - this is what I'm talking about. I didn't realize there was a term for it.
posted by otherwordlyglow at 5:01 PM on September 21, 2013

Actually, yes. Any month you don't pay, the mortgage company will - as a matter of course - send a property inspector to do a drive-by. This is mainly to identify destroyed and abandoned properties, exactly as described in this question.
posted by celtalitha at 5:30 PM on September 21, 2013 [1 favorite]

The solution to squatters and other crime is to call the police when you see it.

If you don't plan to sell, your property value is irrelevant.
posted by gjc at 5:41 PM on September 21, 2013

The general practice in places I've lived (including CA) is for neighbors to take care of the front yard (mowing, shoveling, whatever) because the bank won't. The bank should take over utilities, though. I bought a foreclosure in MN and the electric, water, and gas were all on when I first looked at it.
posted by padraigin at 8:32 PM on September 21, 2013

Get the keys, so you can shut off the water or other things if needed. Sounds like a broken pipe would flood you or the neighbor. Perhaps ask them to drain the pipes if you live in a place if the temps go below freezing.

Get the number of their bank. Which is hopefully local. Do know that when the bank takes over, they will change the locks, so get the number so that you can call them for broken pipes, etc.

Ask that the people leave the curtains drawn so that people can't see inside. Mow the lawn if you feel like it.

Right now we have a foreclosed house behind us that has been in such a state since we moved in 3 years ago. It was for sale for a while. Right now people come and mow a few times a summer. It has no water due to leaking pipe from the shared well. The house to the west of us is also in foreclosure, and the bank is the opposite coast from us. The people left the house with cats inside (and open windows,) and about 10 bags of trash on the porch that are now ripping open with sun or animals. We get wind storms and the trash is blowing onto my property. Several realtors have had signs up for a couple of days then took them down. A water pipe from the shared well was leaking into the road, the people on the well had to fix it themselves. They shut off water to the house. Right now the rumor is the bank doesn't think it is worth the money to get someone to clean up the house and yard. Hopefully your neighbors will be nicer and not leave such a mess for you.

Wife of 445supermag
posted by 445supermag at 9:34 PM on September 21, 2013

Wait a minute, you're in San Fancisco? that kind of changes everything. Are you 100% sure they're actually underwater on the house? House prices in some parts of Cali have been rising at a 30% annual rate for over a year now. Even if they bought at the height of the bubble, they ought to be able to get out at a profit at this point. But that's their problem.

However, this may be useful from your perspective --- the mills of the Banks grind slowly, but they're not going to want to sit on a house if they can get out of it and still make a profit. Check this Redfin report --- more than 40% of homes in San Fran get sold in less than two weeks, these days. I wouldn't want to place any faith on the competence of big banks and services, but I sincerely doubt that the house will be vacant for two years without the current owners deliberately dragging it out in soon as the bank has their hands on it, they ought to be able to sell it really quickly. Your best move is to try and make sure that happens as quickly as possible. Or if you can, tell your neighbours to ask the bank if they can do a short or something... That'd be even better.
posted by Diablevert at 9:04 AM on September 23, 2013

Yes, San Francisco. The current owner is a real estate agent and presumably has done his homework on the value of the house. I know what he paid for it in 2007 and I really doubt he could get that for it today, despite increasing values. I also know he recently sold a vacation house he owned elsewhere in the state. So my speculation is that he leveraged the house next door to buy the vacation home, sold that at a profit and feels like he can make a "clean" getaway since he's moving back to his home country and has no intention of coming back here.

The house, as far as I know (I was last in it about 6 months ago) is in good condition and I'm sure if the process goes quickly and the bank prices it to move (why wouldn't they?) it will sell. I'm mostly just hoping to speed along the process however I can. I think they might have sold some of the appliances already.
posted by otherwordlyglow at 10:32 AM on September 23, 2013

I'm sure if the process goes quickly and the bank prices it to move (why wouldn't they?) it will sell.

Banks move in mysterious ways. There's a foreclosed/abandoned house in my California neighborhood that the bank made zero effort to sell (no showings, no listing, VM left for the agent on the sign never returned). Also, if the bank sells at a loss, that event forces them to acknowledge that they lost money, while sitting on an asset does not.

I guess what I'm saying is, assuming the bank behaves like a motivated seller is not always true with foreclosures.
posted by zippy at 1:36 PM on September 23, 2013

I guess what I'm saying is, assuming the bank behaves like a motivated seller is not always true with foreclosures.
And therein lies my concern. Well, we've seen them selling the appliances so clearly this is well underway. I talked to a real estate agent who works on a lot of foreclosures here and she gave me some ideas of what to expect and thought it could take at least a year for anything to happen. She didn't see anything hugely concerning about keeping the lights on. We still need to talk to the owner but I'm pretty sure he's trying to avoid us now!
posted by otherwordlyglow at 7:05 AM on September 25, 2013

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