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Thread: Zombie foreclosures: Borrowers hit with debts that won't die

  1. #1

    Zombie foreclosures: Borrowers hit with debts that won't die

    Even though Christopher Warner's mortgage debt was extinguished upon his foreclosure, debt collectors are still seeking $120,000.
    NEW YORK (CNNMoney)
    Borrowers are discovering that their foreclosed homes are coming back to haunt them -- long after they have moved out.

    In these "zombie foreclosures," borrowers move out after their bank schedules a foreclosure auction only to learn months or years later that the auction never took place or the bank never transferred the deed. That means the borrower still technically owns the house and is on the hook for property taxes, fees and homeowners' association dues.

    Since the housing bubble burst seven years ago, almost two million properties have started but never completed the foreclosure process, according to RealtyTrac. While no one knows the exact number, it's estimated that tens of thousands 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 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.

    http://money.cnn.com/2013/02/20/real...res/index.html
    Last edited by libertyjam; 02-21-2013 at 09:59 AM.



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  3. #2
    mmm hmm. 2 million. I suspect there is more than that. I can attest to this occurring here. I have a home that when I walked in the first time the calendar on the wall was frozen at august 2008. nearly 5 years. The city is still sending code violations to the mortgage holder who has long since abandoned the property.

    Clearly it's banked owned partial foreclosure, as the broker on the property has consideration with the bank and the bank has hired a national property management company to deal with the clean out. I am contracted to handle the larger tasks that the small outfitters can't bid on.

    There was a parade of investors coming thru the day I was out taking care of my bids on the property. I am sure the broker I work with will have to disclose this encumbrance on the property, but I am not sure at what point the bank will have to mark the value. Probably at the last minute before the deal closes. Maybe not even then.

  4. #3
    If it forces people away from credit dependency and back to cash, then it's a good thing.

  5. #4
    Huh. After we bought this house, it did occur to me to take my time in switching the electricity over to my name, but they emphasized that I could be imprisoned/fined for failure to do so within something like 48 hours.

    One set of rules for them, another for us.
    Those who want liberty must organize as effectively as those who want tyranny. -- Iyad el Baghdadi



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