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January 10, 2013


Replies: 29

Zombie Foreclosures rise from the grave!


Zombie foreclosures.

This bizarre term refers to a bizarre, little-known but very real horror of the U.S. housing bust that is crippling homeowners coast to coast, six years in.

Thousands are finding themselves legally liable for houses they didn't know they still owned after banks decided it wasn't worth their while to complete foreclosures.

With impunity, banks walk away from foreclosures much the way some homeowners walked away from their mortgages when the housing market first crashed.

Unsuspecting homeowners nationwide have had their wages garnished, their credit destroyed and their tax refunds seized - all due to zombie titles.

They've opened their mail to find bills for back taxes, graffiti-scrubbing services, demolition crews, trash removal, gutter repair, exterior cleaning and lawn clipping.

At their front doors they've encountered bailiffs brandishing summonses.

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.

The mess never ever ends.

If enough of this stuff happens do you think the minuscule 'recovery' is going to be threatened?

Will there be a bail out or something?



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Devious Comments

AbCat Jan 11, 2013   Writer
A bank should not be able to opt out of a foreclosure without giving notice to the homeowner. If it fails to do this it should be liable for any upkeep that is demanded by the local government.
That doesn't appear to be happening.
They give notice to the homeowner. The only instance where I could even see this possible is through the various HUD and voluntary moratoriums on foreclosures. But those were all temporary and homeowners still had the option to voluntarily hand over the home in a pre-foreclosure sale.


Again, banks are backed by investors. Banks want a clear title with no liens in order to ensure payment from the investor. I can't imagine the scenario where a bank is willing to take a total loss with no reimbursement from the investor. I can imagine that during a moratorium, the homeowner by design still owns the home and is responsible for it. If homeowners abandoned their responsibility and did not take measures to hand over the home, I could see more fines or penalties being incurred. But even still, as soon as the moratorium is lifted, the bank will do everything to get clear title to get their money back.

This is not an issue for the banks, but for institutions like HUD, Fannie, Freddie, Ginnie.
dumbhoar1-plz Jan 10, 2013
you're a lil' touched in the head aren't you?
EnuoCale Jan 11, 2013  Hobbyist Writer
I'm a little touched in my pants. By myself.

Fuck. I wanted to make that joke in general, but now you'll think it's about your avatar. Nevermind, then.
dumbhoar1-plz Jan 11, 2013
we'll some body has to be the one to touch you right?? I'm sure you'll find a nice fella one day.
You know what would have been great in any of these articles?


One mentions "thousands" out of 10 million. But neither mention any banks or mortgage companies, any explanation of any status, or any statement from any financial institution that might be responsible for any wrong doing. Just because someone claims you owe something, does not mean it is legally true. Wouldn't be the first time alarmist and shaky journalism has tried to spread fear.

See, mortgages don't just float in space. They are all backed in some regard. FHA, VA, or Conventional. Backing risky loans was the problem with the housing bubble. Yes people are responsible for their own debt, but when they default, there is another shoe that falls when those backing the loan still insure the borrowed amount. Title ownership is a secondary matter. Clear title and ownership can happen regardless of foreclosure.

Also, there was a foreclosure moratorium. Where banks could not foreclose. If someone abandoned a property or a foreclosure process had started, but the bank was forced to halt it, it is not the responsibility of the banks for this delayed (maybe indefinitely) proceeding. It is the fault of the government policy that forced this.

And most of the time, if the homeowners had taken responsible measure to attempt to Short Sale or Dee in Lieu, they would have been better off. There still may be rare occasions where this could happen and while the borrower can be pursued, ultimately falls on the lender and the insurer of the loan.
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