CNN: Zombie Foreclosures – Borrowers Hit with Debts that won’t Die
Zombie foreclosures: Borrowers hit with debts that won’t die
Borrowers are discovering that their foreclosed homes are coming back to haunt them — long after they have moved out.
In these so-called zombie foreclosures, borrowers move out of their homes after their bank schedules a foreclosure auction only to find out months or years later that the auction never took place or the bank never transferred the deed to the house. That means the borrower still technically owns the home, leaving them on the hook for property taxes, fees and for homeowners’ association dues.
Since the housing bubble first burst seven years ago, almost two million properties have started the foreclosure process but never completed it, according to RealtyTrac. In half of those cases, the homeowner is fighting to stay in the home. But there are close to one million properties that are in some sort of foreclosure limbo. While no one knows the exact number, it’s estimated that tens of thousands of those properties could be zombie foreclosures.
Many of these homes are in low-income communities where foreclosures are so difficult to sell that lenders sometimes delay taking possession of the property to save on taxes and other costs that then stay under the borrower’s name.
Those debts can then go unpaid for years because the borrower is unaware they owe them, further slamming their credit score and making life after foreclosure even harder.