A zombie foreclosure can occur when a homeowner leaves their home as a result of foreclosure proceedings, but the bank does not follow through with a foreclosure sale. As a result, homeowners may end up being financially responsible for years of unpaid property taxes, utility bills, maintenance costs and more.
How Do Zombie Foreclosures Happen?
Zombie foreclosures began to happen after foreclosure rates skyrocketed in 2008 and the banks experienced a hard time getting rid of all of their foreclosed homes. The banks were forced to hold onto properties for longer periods of time.
As owners of the properties, the banks became responsible for maintaining the properties. Maintaining the properties could have included paying homeowners association fees, lawn maintenance, home repairs, and more.
To avoid the costs associated with maintaining a property, some banks chose to stop their foreclosure proceedings before the actual foreclosure sale in order to leave homeowners responsible for the properties – unbeknownst to them. Some homeowners would vacate their homes only to find out later the banks did not transfer ownership of the title. Consequently, some homeowners were slammed with thousands in unpaid bills.
Are Zombie Foreclosures Really a Serious Problem?
The real estate data company, Realty Trac, performed a 2013 study and discovered there were more than 300,000 zombie properties in existence across the US. Florida was hit the worst by zombie foreclosures with an astounding 90,556 zombie foreclosures on the market.
The consequences for homeowners of zombie properties can be severe. After an extended period of time with unpaid expenses adding up, homeowners may have their tax returns withheld, bank accounts garnished, credit scores ruined, and even face criminal charges.
According to a March 2013 article, titled “Foreclosed ‘Zombie’ Homes Exceed 300,000 Properties: Study,” on the Huffington Post website, “Unsuspecting homeowners have had their wages garnished, their credit destroyed and their tax refunds seized… In some cities, people with zombie titles can be sentenced to probation, with the threat of jail if they don’t bring their houses into compliance.”
How Can I Protect Against a Zombie Foreclosure?
To avoid being the victim of a zombie foreclosure, homeowners should stay well informed as to the status of their foreclosure proceedings. The foreclosure process can take a very long time to run its course and homeowners should follow up regularly with their banks to keep themselves aware about the status of the home.
Homeowners should never assume they are not responsible for the home. It is necessary to follow up until the foreclosure sale has completed and the home title has been transferred.