Richard Zombeck, Justizz.com
Zombie foreclosures are when a bank or servicer starts foreclosure proceedings, the homeowner moves out, and then the bank fails to follow through. The homeowner is then left in a sort limbo, waiting for the ball to drop leaving them holding the bag.
This has resulted in hundreds of thousands of properties abandoned in a varying states of decay.
Servicers typically flood defaulted homeowners with as many 250 letters and phone calls telling them their home is going into foreclosure, but they usually fail to notify the borrower when the foreclosure is stalled.
Nationwide there are roughly 152,000 vacant or abandoned homes for which the servicer has not taken title to the home. These properties make up roughly 22% of the 676,000 bank-owned homes that are held by banks and not listed for sale.
The Consumer Financial Protection Bureau (CFPB) found “it was extremely common” for servicers to charge off low-balance loans and not notify borrowers or municipalities if they did not complete the foreclosure and take title to the property. As a result, borrowers often were not notified that they were still responsible for repaying the mortgage debt, taxes and code violations.