- Real Estate
Zombie Title...When The Bank Walks Away From Foreclosure
Many homeowners have made the expected yet wrongful assumption that they are required to move out of their house as soon as the foreclosure complaint is filed, rather than seeing the entire process through to the end and fighting for what is rightfully theirs. A new and emerging pattern of additional bank misconduct has now been discovered. This misconduct involves banks beginning foreclosure proceedings, and then without notification or explanation to the homeowner the bank dismisses the foreclosure. In most if not all cases, the homeowner is unaware that the foreclosure has been dismissed, often times learning this has happened months if not years after the homeowner has moved out of the house. The end result of this bank misconduct is what is affectionately known as a "zombie title".
For many reasons which are unknown to the homeowner, the bank makes the decision to dismiss the foreclosure and walk away from the property. In my opinion, the banks have made a decision as "the cost of doing business" to walk away from these properties, after learning that they have left the titles to these properties in complete shambles with the use of forged/fraudulent and robo-signed documents. Often times, it costs THOUSANDS of dollars to complete an Action To Quiet Title, which is a Court Action to resolve these title/ownership issues for these properties. It is more profitable for the bank to walk away from the mess of their own making, charge off the debt as uncollectable and then further profit by collecting on the insurance from the credit default swaps, etc.
This misconduct leaves these homeowners unknowingly still holding legal title to their properties, in addition to being responsible for all other costs of maintaining their property (taxes, insurance, etc.). Furthermore, these "Zombie Titles" have caused additional financial trouble for these homeowners who have moved out of their properties and have moved on to the next chapter of their lives. Because homeowners often times do not learn that they are still the legal title holder to their property for months if not years after the foreclosure, the property has not been maintained which leads to further expenses for the homeowner. The homeowner may also be charged hefty penalties and fines, in addition to possible legal action due to the house being neglected and being in disrepair. Some homeowners have also been subject to wage garnishment along with further destruction of their credit from which they are trying to recover due to the foreclosure.
It is essential that all homeowners stay in their houses until the foreclosure process is completed, in addition to fighting the foreclosure due to the rampant bank misconduct and abuses. When the homeowner stays in their house through the entire process, the bank will have to file a lawsuit for eviction to remove the homeowner from the house. It is also essential that the homeowner monitors their property/title record in the County Recorder's Office where the property is located to ensure that the documentation is in order, and to initiate an Action To Quiet Title if required.