Zombie Foreclosures!

Thousands of homeowners who had been served foreclosure notices moved out of their homes. What some of them were never told is that the foreclosure process had been abandoned by their bank. Typically, these zombie foreclosures were lower priced properties where the banks in question had decided that the property’s value was not worth their time. These properties sat vacant with no one claiming responsibility for the upkeep, mortgage or taxes, falling prey to vandalism and nefarious activities.

Reuters reported that there were thousands of such owners of zombie homes. A borrower believes that a foreclosure on their property has been conducted and that he is no longer responsible for the property. Months or years later he finds out that there never was a foreclosure and he now has large financial responsibilities he never knew about, owing thousands of dollars in mortgage debt, as well as code violations for abandoning the property and municipal services like water and trash.

The Consumer Financial Protection Bureau is looking closely at abandoned properties and zombie foreclosures, and is working to resolve these issues and to create a national registry of zombie properties.

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