Bank “Zombie Title” Rises, Hurting Communities and Borrowers, as OCC and Fed Sit Pat

Toxic Spray

Bank “Zombie Title” Rises, Hurting Communities and Borrowers, as OCC and Fed Sit Pat

We’ve written before about the perverse phenomenon known as “zombie title.” Servicers initiate a foreclosure and complete most of the steps, including evicting the borrowers, but then fail to take title to the house. Adding insult to injury, the banks rarely inform the former homeowner of this cynical move. Not only does often find out years later that he’s on the hook for property taxes and in some cases, fines from the local government, but the servicer has made such a mess of title that the owner can’t get rid of the property, unless he takes a quiet title action, which typically can’t commence until five years after the foreclosure was abandoned.

Kate Berry of American Banker provides an update. She flags that this abuse has skyrocketed sin e 2010, when the GAO estimated that abandoned homes ranged between 14,500 and 35,600. They are now pegged at 35% of the one million homes in foreclosure. AB042413WALKAWAY

Homeowner advocates are up in arms because both the Fed and OCC have issued guidance requiring servicers to inform borrowers and municipalities if they intend not to complete a foreclosure. They also contend that this is a fair lending practice abuse, since, natch, the borrowers tend to live in low-income communities. And abandoned homes are a blight.

Rest here…

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4closureFraud.org

Comments
3 Responses to “Bank “Zombie Title” Rises, Hurting Communities and Borrowers, as OCC and Fed Sit Pat”
  1. Laura says:

    I don’t think banks can get clear title (adverse possession) because they don’t pay the taxes in their own name (a requirement). They pay in the name of the borrow who still has title. I DO think hedge funds (Blackstone etc) will hold properties in their own names and THEY will get clear title in 7 years……….then dump it all………….not too smart? Hey they haven’t been stellar leading into this mess. They are buying in bulk at huge discounts because who else will buy without clear title? It will keep real estate in a phony dis-equilibrium for decades.

  2. I agree with Ms. Sutter.I think this was a plan and none of us saw it coming.

  3. Sheryl Sutter says:

    The banks want to ensure that you have to spend as much money as possible…do you know how much it costs to quiet a title?…and of course, there is no recourse to sue for punitive damages…welcome to the new America. Eventually we will all have to just sign our property over to the government and just pay rent.

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