There are many ways a person can react to receiving a notice of default. Some homeowners contact their lender and discuss new mortgage financing options; some ignore the notice. There are others, however, who vacate the property before the foreclosure can proceed. While there are many reasons why a homeowner may choose any one of these options, Tiffany Bucher of Foreclosure Excess Proceeds stresses to readers that vacating a pending foreclosure property holds a variety of financial and legal risks.
What is a Zombie Foreclosure?
When a homeowner receives a notice of default, they will sometimes vacate their property prematurely, expecting the home to be lost in the pending foreclosure. However, in some cases, the foreclosure may be canceled or put off indefinitely, leaving the house title and all legal and financial responsibility with the original homeowner. This situation is called a zombie foreclosure and can lead to severe financial consequences for homeowners who are unaware of their continued home ownership.
How Zombie Foreclosures Can Impact Homeowners
Zombie foreclosures can have severe repercussions for those who are unaware of their continued homeowner status. For years after the 2008 housing crash, Americans who had previously believed their home to be foreclosed were shocked to learn of their continued ownership of their defaulted home and left to work through not only the disrepair of their vacant property but the many legal and financial consequences associated with it. Some of the ways that a zombie home can affect homeowners are:
– Fines often accrue on properties that violate zoning laws after abandonment
– Unpaid property taxes can accumulate
– Homeowners associations can file lawsuits for unpaid HOA fees
– Homeowners can receive bills for unpaid housing services such as maintenance, trash removal, and various services. For the reasons listed above, Tiffany Bucher of Foreclosure Excess Proceeds encourages homeowners to remain in their homes regardless of their current default status. When a foreclosure takes place, the foreclosure sale proceeds are used to pay the outstanding debt on the foreclosed mortgage, and any remaining proceeds are given to the homeowner. If a homeowner prematurely abandons the property, however, when the home is eventually foreclosed, the proceeds will go to repairing the property and paying off outstanding taxes, HOA Association fees, and other debts, leaving little to no profits for the homeowner.
Tiffany Bucher Foreclosure Excess Proceeds 