Zombie Title

A “zombie title” starts out as an ordinary title. A homeowner buys a home and gets a mortgage from the bank. However, the homeowner falls behind on mortgage payments. The house would normally be foreclosed by the bank, but for various reasons (such as the robosinging scandal, where banks bundled their mortgages into securities, often without the proper paperwork), the bank chooses not to foreclose. The homeowner is still liable for the upkeep of the house, even though he or she might have left the house. The deteriorating, often abandoned house is said to have a “zombie title” by an owner who thought he or she had walked away from the problem.
 
“Zombie title” has been cited in print since at least September 30, 2012, when the story “‘Zombie titles’ haunt victims of home foreclosure” appeared on NBC News. Many stories about “zombie titles” were written in 2013.
 
 
Investopedia
Definition of ‘Zombie Titles’
A right to ownership and possession of a home that remains with a person who believes he or she has lost the property as a result of foreclosure. A zombie title is a title to real property that happens when a lender initiates foreclosure proceedings by issuing a notice of foreclosure and then unexpectedly dismisses the foreclosure.

If the person is unaware of the foreclosure dismissal, he or she will be left holding a zombie title.
 
NBC News
September 30, 2012
‘Zombie titles’ haunt victims of home foreclosure
By Michelle Conlin
(...)
The Kellers are caught up in a little-known horror of the U.S. housing bust: the zombie title. Six years in, thousands of homeowners are finding themselves legally liable for houses they didn’t know they still owned after banks decided it wasn’t worth their while to complete foreclosures on them. With impunity, banks have been walking away from foreclosures much the way some homeowners walked away from their mortgages when the housing market first crashed.
 
“The banks are just deciding not to foreclose, even though the homeowners never caught up with their payments,” says Daren Blomquist, vice president at RealtyTrac, a real-estate information company in Irvine, California.
 
Since 2006, 10 million homes have fallen into foreclosure, according to RealtyTrac, a number that in earlier, more stable times would have taken nearly two decades to reach. Of those foreclosures, more than 2 million have never come out. Some may be occupied by owners who have been living gratis. Others have been caught up in what is now known as the robo-signing scandal, when banks spun out reams of fraudulent documents to foreclose quickly on as many homeowners as they could.
   
Realtor.com
Zombie Titles: When Foreclosures Become Walking Dead Homes
Real Estate News | Jan 18, 2013 | By: Sam DeBord
(...)
What is a zombie title?
Title is a legal document that assigns ownership and responsibility for a piece of real estate to an owner. When a homeowner defaults on a loan, the lender begins the foreclosure process to take back the title to the home. The foreclosure process can take anywhere from a few months to a few years between the first notice of default and the lender’s scheduled auction/foreclosure sale. Often, the homeowners move out of the home during this time period, believing that it will be sold.

It usually is. However, sometimes the lenders get caught up in legal/financial issues that delay their ability to actually conduct the sale of the home. Sometimes they just change their minds and never push foreclosure through to closing.
 
Enter the zombie title. Homeowners Joe and Jane have suffered the financial consequences of the foreclosure process, their credit is ruined, and they don’t own a home (to their knowledge). They moved out of their home two years ago when their lender scheduled a foreclosure sale date. Out of the blue, their local city government begins sending them fines for not keeping up their property. They thought the bank had sold it off already. The house has been deteriorating for years, and might be boarded up or inhabited by squatters. This half-dead home is still haunting Jane and Joe financially because the zombie title is still in their names.

4closureFraud
ZOMBIE TITLES: DEADBEAT BANKS WALKING AWAY FROM FORECLOSURES TO AVOID UPKEEP
Posted by 4closureFraud on April 25, 2013
Banks are walking away from thousands of vacant properties after starting and then refusing to complete the foreclosure process because they do not want to pay for maintaining the homes.
 
Naked Capitalism
THURSDAY, APRIL 25, 2013
Bank “Zombie Title” Rises, Hurting Communities and Borrowers, as OCC and Fed Sit Pat
We’ve written before about the perverse phenomenon known as “zombie title.” Servicers initiate a foreclosure and complete most of the steps, including evicting the borrowers, but then fail to take title to the house. Adding insult to injury, the banks rarely inform the former homeowner of this cynical move. Not only does often find out years later that he’s on the hook for property taxes and in some cases, fines from the local government, but the servicer has made such a mess of title that the owner can’t get rid of the property, unless he takes a quiet title action, which typically can’t commence until five years after the foreclosure was abandoned.
 
ForeclosureBuzz.org
Foreclosure’s Walking Dead: “Zombie” Phenomenon Poses Risk for Economic Recovery
Posted on May 2, 2013 by Kathleen Griesbach
The catchy nomenclatures “zombie foreclosures” or “zombie titles” were coined by news organizations to describe abandoned homes in a state of proverbial limbo. Such homes are ownerless, in the sense that they are unoccupied by owners that hurriedly jump ship after receiving foreclosure notices required by state law. However, instead of executing a quick and efficient auction of the property, the bank takes its time, sometimes years, to sell the home to the highest bidder.