Zombie Foreclosure–What is it?

Zombie foreclosures happen when the homeowner assumes they have lost their home and moves when the bank begins foreclosure, but the foreclosure process is never completed. So both the homeowner and their title are caught in between this world and the next, like a zombie.

The problem is that once the homeowner leaves, there’s an opportunity for real estate taxes to go unpaid and the property to go unmaintained, which often leads to code enforcement violations, vandals, and even squatters. You wind up with a whole slew of new problems—which the homeowner, not the bank, can still be liable for without even knowing it

Your first step when fighting back against a zombie foreclosure is to check the county or tax records. These are online in most areas now and will show you if you’re still on the title.

Anyone who has been foreclosed on might want to do this, if only to be sure. If you see that the bank has started but not finished a foreclosure, contact the bank and try to find out what their plans are.

The good news is that most banks are far more open nowadays to negotiate a short sale, deed in lieu of foreclosure, or agree to a loan modification than they were when most of these foreclosure cases were started.

The next step is to review current records for past due taxes, code violations, or other liens, and check out the property condition. You want to make sure you do what you can to avoid any more damage than what has already occurred and to also secure the home.

Depending on the circumstances, you may be able to rent the home or move back into it—a happier ending than most zombie movies get to see.

 

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Underwater Mortgages Rise

The percentage of homeowners with mortgages who owe more than their homes are worth continued to rise during the first quarter, but only 1 in 10 of underwater homeowners are seriously delinquent on their loans, according to estimates released today by real estate search portal Zillow.

Zillow — which looks at outstanding loan amounts on individual properties, and compares them with estimated valuations for each home that are generated by computer models — estimates that 15.7 million homes were underwater during the first three months of the year.

That’s 31.4 percent of all homes with mortgages, up from 31.1 percent during the last three months of 2011 (not all homeowners have mortgages).

Although just 10.1 percent of underwater homeowners were more than 90 days behind on their mortgage payments, that represents nearly 1.6 million homes that could eventually hit the market as distressed properties.

Numbers like that can put fear into the hearts of would-be homebuyers, since distressed properties sell at discounts that can drag down home prices. Those effects are highly dependent on individual market conditions.

Zillow estimates that nationwide, about 2.4 million underwater homeowners owe more than double what their home is worth. In the Las Vegas metro area, 26.8 percent of homeowners with mortgages are that deeply underwater — nearly 90,000 homes.