No, it's not the latest remake of "Night of The Living Dead" and it certainly hasn't been nominated for an Academy Award. It is yet another strange twist in our national foreclosure crisis. A Zombie Foreclosure (otherwise known as a Zombie Title or a Bank Walkaway) occurs when the bank never completes the foreclosure. More and more distressed homeowners in Southern New Hampshire, and across the country, have been the recipient of a nasty surprise when they discover that the home they thought they had "walked away" from is still stalking them.
Since the housing bubble burst and the foreclosure crisis began, thousands of financially distressed homeowners have become so disgusted with the morass of confusion that is the hallmark of the various modification programs that have been trotted out or with the frustration of an improperly handled short sale attempt that they have eventually just given up and "walked away" from their mortgage and their home in an effort to escape the unrelenting stress and start anew. Some have even gone as far as filing bankruptcy in an effort to protect themselves from liability. And, while filing bankruptcy can protect from any liability with regard to paying back the loan that the mortgage was based on, it does not protect against any costs incurred by the property itself going forward.
Let me explain. When a borrower/homeowner walks away and/or files bankruptcy, the assumption is that once the lender is no longer receiving payments as due, they will foreclose...and they usually do. In fact, Southern New Hampshire has one of the shortest foreclosure timelines in the Country. But sometimes months, or even years, after the homeowner has walked away they discover that the bank never did foreclose.
This is important because the act of foreclosure is what transfers ownership and, therefore, legal responsibility for the home from the original distressed homeowner to the bank. If the bank doesn't foreclose the unsuspecting homeowner is still responsible for the property...for property taxes, water/sewer fees and condo fees that continue to accrue and, sometimes, lawsuits from the town or the county because of the deteriorating condition of the property...and on and on. A January 10th Reuters Report entitled, "The Latest Foreclosure Horror, The Zombie Title" tells the true life horror stories of homeowners who have had their finances and credit further destroyed by mounting bills levied against them by the Town, County or State for their abandoned property. Some have even been threatened with jail if they failed to bring their property into compliance.
This responsibility is still there even if the homeowner has filed bankruptcy because bankruptcy protects from the point of the filing backward but not forward.
Over the last month, the news reports have been filled with stories of Zombie Foreclosures as this new twist comes to the forefront but I have been personally aware of a number of instances right here in Southern New Hampshire and Northern Massachusetts for well over a year and have, in fact, successfully facilitated short sales for several distressed homeowners caught in that nightmare.
If you have "walked away" from your mortgage and your home in the past, my best advice to you is check to make sure the foreclosure actually took place and, if it hasn't yet, seriously consider a short sale. They can be done successfully which will result in the outcome you were trying for in the first place, you'll get to finally "walk away" clean.
For more information on Southern New Hampshire Short Sales, you can contact me at 603-490-5344.
And remember, "beat 'em or burn 'em, they go up pretty easy".