If you’ve ever heard the term “zombie foreclosure,” you might wonder, “What is a zombie foreclosure?” And why it’s a growing concern for homeowners in California. This occurs when a homeowner believes their property has been lost to foreclosure, while the lender never completed the foreclosure process. It also means that the title of the property will be in the homeowner’s name, subjecting them to ongoing liabilities, including property taxes and code violations. At Shapero Law Firm, we represent borrowers in such complex scenarios to protect against such circumstances in the future.
A zombie foreclosure occurs when a lender initiates proceedings but doesn’t complete them, leaving the property title with the original homeowner. Many homeowners, believing they’ve lost the home, abandon it before legally required, unaware that they remain responsible for taxes, insurance, and upkeep. Because the foreclosure process can be lengthy, these properties often fall into disrepair, attracting fines or legal issues.
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Zombie foreclosures most often happen when homeowners vacate their homes after a foreclosure notice has been given but before the foreclosure is complete. Most people think that by leaving, the lender will finish the process and take possession of the house. But if the lender then stops the foreclosure, the title to the house remains with the homeowner.
Common reasons for zombie foreclosures include:
The result? Homeowners unknowingly face ongoing liabilities such as taxes, utility bills, and fines.
Zombie foreclosures also became more frequent because of changed foreclosure practices and economic conditions. In their place, lenders nowadays abandon the foreclosure of any properties when they are perceived to be financial liabilities, especially costly to maintain or sell.
Following the 2008 financial crisis, lenders foreclosed on many devalued properties but then usually didn’t complete the process, leaving titles in limbo; recent economic uncertainties have only heightened this trend.
Zombie second mortgages can also emerge out of nowhere. Those are old second liens that borrowers thought had been settled but show up years later when debt collectors revive them. The Consumer Financial Protection Bureau says some borrowers are being contacted by collectors seeking payment for long-forgotten second mortgages and threatening foreclosure if the borrower doesn’t pay.
A zombie foreclosure occurs when a homeowner believes their property has been foreclosed and vacates the premises, only to later discover that they remain legally responsible for the property. This situation can lead to unexpected financial liabilities, including property taxes, fines, and maintenance costs.
If you suspect you’re facing a zombie foreclosure, it’s crucial to take immediate action to protect yourself and prevent further complications.
If you think you have a zombie foreclosure, here’s what you need to do right away to defend yourself: find out who actually owns the home, contact the lender, and get a lawyer while there is still time.
What to Do:
The length of time a lender has to foreclose varies from state to state. For example, in California, it is four years from the date of default. If they don’t act within that period, the statute of limitations may stop them from pursuing foreclosure.
Zombie foreclosures complicate matters, as abandoned properties can sit in legal limbo for years. In some cases, lenders restart foreclosure long after the homeowner thought it was resolved.
TALK TO AN ATTORNEY TODAY
If you’re dealing with a zombie foreclosure in Los Angeles, Shapero Law Firm is here to help. Our experienced attorneys focus on protecting borrowers from unexpected liabilities and guiding them through complex foreclosure processes. Contact us at 213-394-6031 or visit us at 633 West 5th St, 28th Floor, Los Angeles, CA, 90071 for assistance.
With over a decade of litigation experience, Attorney Sarah Shapero, founder of Shapero Law Firm, has secured seven-figure jury trial wins and saved countless homes from foreclosure. A Super Lawyer and Lawyer of Distinction, she brings expertise in foreclosure, employment, and bankruptcy law, practicing in California and federal courts.
Trust her proven track record and commitment to delivering powerful legal results.
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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by Founding Partner, Sarah Shapero who has more than 10 years of legal experience as a real estate attorney.
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