Florida leads nation in “zombie” foreclosures
According to recent data, Florida leads the nation in zombie foreclosures.
Although most economists have declared the recession of 2008 over, many areas of the country are still reeling from its aftershocks. Unfortunately, Florida is no exception, as recent data from RealtyTrac show that the state has the highest rate of “zombie” foreclosures in the nation. According to the data, there were 36,000 such foreclosures in the state as of January 31, accounting for approximately 25 percent of all foreclosures.
The problem of zombie foreclosures
A “zombie” foreclosure is a type of incomplete foreclosure. It occurs when the homeowner abandons the home when the home goes into the foreclosure process. The homeowner believes by doing so, he or she is effectively surrendering the property to the lender and relieving themselves of further financial obligations.
Unfortunately, this is not the case in a zombie foreclosure, as the lender does not sell the property after it has been abandoned. Although the reasons behind this action are varied, in some cases the lender, for whatever reason, does not want to take possession of the property. This is especially true if the lender already has a large portfolio of foreclosed properties, as taking possession of the property would make the lender liable for taxes and other costs of maintaining the property. As a result, the property sits abandoned.
This can create problems for the homeowner. Since the house has not been sold, the title to it remains in the homeowner’s name. Because of this, the homeowner is still obligated to pay property taxes and HOA dues. Additionally, as the unused property deteriorates, the homeowner may potentially be hit with fines for violations of housing codes.
In many cases, the homeowner is not aware that the foreclosure sale did not occur, so these financial obligations can come as very unpleasant surprise, especially given that the homeowner is likely already in a financially difficult position.
Dealing with foreclosure
Because zombie foreclosures can exacerbate financial problems for homeowners, it is best not to abandon the home when faced with foreclosure. Instead, filing for bankruptcy can help end the foreclosure process entirely. For example, Chapter 13 allows the homeowner to stay in the home while the outstanding mortgage debt is brought current over three to five years. In addition, bankruptcy can eliminate most other debt, allowing more income to be devoted towards paying the mortgage.
Abandonment of the property should not be considered, even if the homeowner no longer wants (or cannot afford) the home. In such cases, there are legal alternatives to foreclosure that will ensure that the title to the home is transferred, relieving the homeowner of future financial obligations.
If you are faced with the foreclosure of your property, it is important to learn about all of your options. The experienced attorneys at Kingcade Garcia McMaken can outline the alternatives available to you and recommend the best one for your unique situation.