In the past, we talked about vampire foreclosures, which is when a bank seizes a property, while the owners of the home still live in it. This week we will discuss another monster of a topic called zombie foreclosures.
These foreclosures sometimes happen due to a misunderstanding. For instance, a homeowner receives a foreclosure notice. She or he assumes that the lender will take over the property, so he or she collects his or her belongings and moves away, leaving the property behind.
Some people leave their property when the foreclosure process takes too long.
The zombie foreclosure comes into play after the homeowner has packed his or her bags and left and the foreclosure, for whatever reason, ends up being cancelled. This means the sale never took place and that the house remains in the vacated homeowner’s name.
These properties can often be left untouched and fall into disrepair, leaving them susceptible to vandalism and squatters. This happens more than people realize.
How Many Zombie Foreclosures Occur?
A recent study by the real estate information company RealtyTrac found that over 300,000 properties are now “zombie” properties.
The Washington Business Journal published an article this month that shows that Maryland ranks high for zombie foreclosures. Maryland has a reported 3,400 abandoned properties, which has led to zombie foreclosures accounting for 31 percent of all foreclosures in the state. This is six percentage points higher than the national average.
Baltimore ranks in the top 10 for cities with abandoned properties. This means that many homeowners in Maryland may be unintentionally setting themselves up for some more troubling times.
Why is Zombie Foreclosure Bad for the Homeowner?
Since the abandoned property’s foreclosure was never finalized, the homeowner is still required to pay any debts associated with it. Sometimes, homeowners are unaware that they still own the property and the debt and fines could pile up without the homeowners knowing. Additionally, zombie foreclosures can damage a credit score even further, because of the unpaid debt.
How Can I Avoid a Zombie Foreclosure?
To avoid being caught in a zombie foreclosure, you need only to stay in your house during the entire process of the foreclosure. However, a bankruptcy attorney may be able to help you stop a foreclosure altogether. In some instances, bankruptcy can be the best way to stop a foreclosure.
[Judd’s Judgment: Thirty-three percent of all the foreclosures in Baltimore are zombie foreclosures.]
Law Firm of Kevin D. Judd – Maryland and Washington DC bankruptcy attorney