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Zombie Homeowner Titles: When Banks Never Complete Foreclosure Leaving You Liable

  • Published: 2013-01-26 : Author: Scura, Mealey, Wigfield & Heyer, LLP
  • Synopsis: Homeowners are discovering the bank never completed foreclosure and they still own the homes and accompanying tax and other problems.

Main Document

"Zombie Titles" Terrorizing Some Homeowners - Many homeowners are discovering that banks never completed the foreclosures they filed and they still own the homes - and a host of accompanying problems.

Zombie Title - When banks unexpectedly dismiss a foreclosure, and the home's title remains in the name of the owner who thought they had lost the property. Homeowners can find themselves the holders of "zombie titles." A regular title becomes a zombie title when a homeowner finds themselves pursued by debt collectors, mortgage services, and local governments for bills related to a home they thought they no longer owned.

Few things are more traumatic than losing a home to foreclosure. Many people found themselves in dire financial circumstances after the economy collapsed in 2008 and were unable to make their mortgage payments. They had to deal with the heartbreak of losing their homes to foreclosure. Now in 2013 many homeowners are discovering that banks never completed the foreclosures they filed, and they still own the homes - and a host of accompanying problems.

What makes a zombie title

In many cases, when homeowners receive notice that their lenders intend to foreclose on their mortgages, they vacate their houses and find other places to live prior to the completion of foreclosure. Due to the glut of foreclosed homes that banks already owned and the difficulties they were having selling them, banks began to drop foreclosure actions they started before the foreclosures were complete.

Many banks reasoned that paying the taxes and upkeep on the houses while waiting for them to sell was too expensive and did not want to be responsible for these costs. Other lenders calculated that the money they would get for many houses was less than the insurance, tax and accounting benefits they would get from counting the mortgage as a loss. Banks also have the ability to sell these unpaid debts to collectors.

The result is that homeowners who thought they had lost their houses to foreclosure still own the properties because their names were never removed from the deeds by foreclosure - and they are not aware of it. Industry experts are calling these deeds "zombie deeds."

Problems for homeowners

These zombie deeds can cause major complications for homeowners. People are receiving bills for expenses associated with the properties such as unpaid property taxes, graffiti cleaning services, trash removal, demolition crews, gutter repair and lawn services. If they do not pay the bills, their wages are garnished and tax refunds seized. Their credit scores are destroyed.

In other cases, people are saddled with houses that have been stripped of anything valuable and left to rot which they cannot sell and mortgages that have ballooned due to non-payment, interest and penalties.

One man with advanced liver disease was denied Social Security disability benefits because the home he thought he lost to foreclosure still had his name on the deed - putting him too far over the asset limit to qualify for benefits.

Talk to a lawyer

Those who have walked away from homes need to be proactive and make sure that the foreclosures go through and their names are removed from the deeds. If you are considering walking away from your home because of financial difficulties, consult an experienced debt relief attorney who can discuss your situation with you and advise you of all of your options.

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