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About Zombie Foreclosure
We all know that when the homeowner is unable to make the payments on their mortgage the lender has all rights to seize the property and put it under foreclosure.
There are various types of foreclosures such as non-voluntary foreclosure, voluntary foreclosure, and zombie foreclosure.
In this post, we will understand what a zombie foreclosure is in detail.
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What Is A Zombie Foreclosure?
Zombie foreclosure refers to a situation where a homeowner abandons their home after receiving a notice of default from the lender, expecting that their property is being foreclosed by the lender.
There could be various reasons why the foreclosure process can be canceled by the lender.
If the foreclosure is canceled and the process remains incomplete, the title of the property will belong to the owner, who may not know that they still own the property and is in charge of the property financially.
Why is this referred to as Zombie Foreclosure? As its name suggests, the property is truly dead, growing more and more dilapidated over time, but its mere presence can continue to harm its homeowners and the surrounding communities.
For example, suppose that a homeowner vacates a property after defaulting on the mortgage payment, but the lender does not complete the foreclosure process, so the homeowner still holds his title for the property.
The property becomes ownerless for a long time and is not being maintained as per the requirement.
Due to this, the condition of the property worsens and creates concerns regarding the safety of the property which can reduce the value of the property in the surrounding community.
How Does A Zombie Foreclosure Works?
A property becomes a zombie home due to the homeowner’s misunderstanding about foreclosure.
During a typical foreclosure, the lender will intimate the borrower with a notice of default for the subject property.
After this notification is made, there is a waiting period in which they can make a large amount of payment to avoid the property going into the foreclosure process.
The payment that the borrower needs to pay could be the number of payments that were missed including the late fees and other charges.
Until the foreclosure process is completed, the homeowner continues to hold title to the property.
If the owners do not pay the default amount within the waiting period, the foreclosure process is initiated and the court will decide that the house belongs to the lender.
It is only after the court’s ruling that the homeowner needs to vacate the property as the ownership of the property is transferred to the lender.
Often, the lender decides not to complete the foreclosure process due to high repair costs or the huge amount of unpaid property taxes.
In such a case the lender will not take title to the home and is not required to notify the homeowner.
This is when the property becomes a zombie property and the title of the home is referred to as a zombie title.
How Does The Zombie Foreclosure Affect The Homeowners And The Surrounding Communities?
Abandoning your home and allowing it to be dilapidated will not relieve your responsibilities towards that home.
If you have moved to another house or city, the specter of your old house may continue to haunt you in many ways.
For instance:
- There could be property taxes that you owe to the county that may go into collections.
- Unpaid homeowner association fees could lead to legal actions in court.
- You may be charged for repairs, maintenance, trash removal, and other services.
- Zombie homes could lead to fines from zoning authorities for violating the zoning laws.
- Abandoning the property might result in financial instability and can affect your homeownership in the future.
- Zombie properties can cause damage to architecture and affect the value of the surrounding properties.
- Zombie houses can become an attraction for homeless people and attract vandalism or other crimes. This can drive away potential new residents and make current residents reconsider whether their neighborhood is still safe to live in.
Conclusion
Zombie foreclosures damage not only their current homeowner’s financial well-being but also the safety of the neighboring communities.
The best way to stay away from this type of foreclosure is to ensure that you understand the foreclosure process completely from the lender.
Make sure you vacant the home only once the process of foreclosure is complete.
