Zombie (foreclosure) Apocalypse is happening!!!
Do not panic! Panic is the enemy of surviving a zombie
attack! Please remain calm and continuing reading for (financial) life saving
information.
No, despite the EAS warning broadcast recently by KRT-TV in Great
Falls, MN, there are no hoards of zombies coming down Main St. You are in no
danger of being eaten on your way to work this morning. That undulating mass
swelling outside the local electronics mega-store banging on the doors and licking
the glass is not the un-dead searching for brains (although, they maybe should
be? That is another blog topic all together); they are just waiting for the new
iRazor Phone or the X-station 7 or that 187” TV.
So what exactly am I talking about? Zombie Foreclosures!
Yes, you read that right, Zombie Foreclosures. If you do not know what that
means, or you or someone you know experienced a foreclosure, or is in the
process of a foreclosure, you need to keep reading.
A zombie foreclosure can occur when a lender starts the
foreclosure process (generally by sending a demand letter) and then just…..stops.
How many of you have that ‘home’ in your neighborhood? You know the one, it has
been vacant for 3 years, yet no foreclosure information can be found. There are
a few weathered and sun-bleached papers taped to the front door. The storm door
lazily droops off the bottom hinge, giving a mournful groan with every passing
breeze. The overgrown landscaping has begun to march up the front steps and is poised
to reclaim the front porch. If you suddenly found yourself in the midst of a
black and white horror movie, this looks like the place where the zombies live.
The truth is they just might.
You ask your local Realtor about it and they say the deed is
still in the name of the last (and still current owner). No evidence of a
foreclosure can be found. Realty-Trac reports pre-foreclosure activity, but
that information is over 36 months old. It’s a zombie! It can come back from
the (foreclosure) dead.
So, what exactly does that mean? For the owner, it
unfortunately means that they could be (and most likely are) responsible for
the last 3 years of property taxes, Home Owner Association Dues, blight fines, ordinance
violations and any other fees, taxes or assessments levied on the property. It
means they still own a property that has no upkeep and is in a horrible state
of repair. It means the township may soon condemn the property – and guess who
gets the bill for the tear-down and cleanup? You guessed it – the property
owner. It also means that the foreclosure they thought happened 3 years ago hasn't happened. Their thoughts of maybe qualifying to buy another home after
the 3 year foreclosure rule no longer apply. It can also mean that when they make an
attempt to solve this problem, it will re-awaken the bad debt account on their
credit and decimate what they have worked hard for three or four years to rebuild.
For the lender, it means they started the foreclosure
process but for one of several reasons it never followed through. They may have
decided the collateral was not worth the cost of foreclosing. They may have
gotten assumed by another, bigger lender who has not yet gotten to that file.
They may have ‘reset’ the foreclosure because a workout plan was being
negotiated and then never resumed the process. There is no requirement that a
lender must foreclose on a property. There is also no legal requirement that a
lender must pursue a foreclosure to completion once they start the process. Some
lenders will mail a notice of dismissal when the stop the foreclosure process;
many more lenders do not.
For potential buyers this can mean they may wind up buying a
foreclosed property that neither the lender nor the prior owner completely own.
This can lead to having large amounts of money tied up into a property they can
neither get clear title to nor sell.
Moneynews.com reports that some 10 million homes have gone
through the foreclosure process since 2006; as many as one-fifth (20%, or 2
million) of those foreclosures have not been completely resolved. A hoard of 2
million Zombie titles floating around is enough to put anyone in the market at
risk of getting bitten. It also means that there could be as many as 2 million 'bitten' home owners who do not know they are infected.
So what can you do? If you had a foreclosure, a quick check
with a Real Estate agent (::ahem::) is a good place to start. They can pull a
copy of the public record to determine if the Sherriff (foreclosure) Sale did
in fact take place and to whom the title was transferred. This could also show
if the title was re-conveyed back to the previous owner after the foreclosure
auction (you can convey a Quit Claim Deed to someone without their knowledge
simply by filing it with the county). Your Realtor (:::ahem:::) can also be a
great referral source for a qualified Real Estate Attorney to review your
foreclosure documents and advise you on how to proceed if there is a zombie
lurking in your closet.
Again, if you had a foreclosure, DO NOT PANIC – panic is
your enemy when dealing with a zombie. Call a Realtor (:::ahem:::) let help you
learn how to avoid the zombie apocalypse.
(Yes, KRT-TV did broadcast a Zombie warning – I hope it
brings a little humor to your day - here it is)
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