Zombie foreclosures come back to threaten homeowners
Zombie foreclosures affect thousands of people across the country, and occur when a bank fails to follow through on a repossession.
Millions of people are still feeling financial stress years after the Great Recession. Numerous families in Georgia faced such challenges as unemployment, credit card or student loan debt, medical bills and even foreclosure.
For a large amount of these people, bankruptcy has provided an option for relief. According to the American Bankruptcy Institute, more than 71,000 non-business bankruptcy cases were filed in the state in 2011-one of the highest numbers in the country. While bankruptcy can help families start over, it is a signal that some are facing additional problems, such as
Many banks not following through with a foreclosure
There are few events more stressful or heartbreaking for a family than losing a home. However, due to such factors as insurmountable bills or even mortgage abuse, many homeowners have had no choice but to walk away from a beloved home, rather than fight to avoid a foreclosure.
Ordinarily, a bank would repossess a home to resell after the owners walked away. However, an increasing amount of banks are failing to follow through with foreclosure procedures after sending numerous repossession notices, says Reuters. Instead, they also choose to walk away if a property’s value is too low to put it back on the market, or if for any other reason it is not in a bank’s best interests to take over the mortgage. When this happens, a mortgage can come back to haunt a homeowner after he or she thinks the nightmare is over. This is known as a “zombie foreclosure.”
Problems zombie foreclosures cause for homeowners
A vacant home that is not taken over by the bank will deteriorate in time and become a blight on the neighborhood. In addition to lowering the neighbors’ property values, abandoned homes can attract squatters and animal scavengers, and become a public health nuisance. Also, homeowners can find numerous unpleasant surprises after they find out they still legally own the property, such as:
- Bills for property taxes.
- Homeowners’ association fees.
- Cleanup and maintenance fees and fines.
- County and city fees.
During this time, a homeowner will often find out that creditors are continuing to come after him or her for the unpaid mortgage amount.
Recently, the Consumer Financial Protection Bureau has begun listening to consumer advocate complaints about the hardships people endure when faced with a foreclosure that won’t go away. The bureau has participated in task forces to try to find a solution to the problem.
Contacting an attorney
It’s good news that some agencies are beginning to realize the devastating impact that zombie foreclosures are having on thousands of families across the U.S., but it is uncertain how long it may be before effective measures are taken. If you are facing a foreclosure or other serious financial setbacks, it can help to speak with an experienced bankruptcy attorney to discuss your options.