Zombie Foreclosures Haunt Boomerang Buyers
When this phenomenon first began to rear it’s ugly head, I initially tried to avoid using the term “Zombie Foreclosures”. I have however, become more comfortable with the term due to the inability to come up with a more appropriate description of this major problem to hit Boomerang Buyers.
It’s been a strange real estate market since the big crash of 2007. As home values dropped, the economy followed suit as hundreds of thousands of families experienced challenges which, in many cases, resulted in the eventual loss of the family home, at least that’s what everyone thought.
After falling behind on house payments, eventually the bank will file a notice of default. A notice of default normally means that a homeowner has only a narrow window of time to catch the mortgage payments up or the lender will foreclose on the home.
Upon receiving the notice of default, knowing that foreclosure was imminent, many families vacated the home, surrendering it to the bank to start life anew and begin the road to recovery. In almost all cases prior to 2007, this story would have ended with the bank foreclosing on the home and everyone going their own way.
That’s what was supposed to happen. Unfortunately, that’s not what happened for many distressed and unsuspecting homeowners. Years later, as families and credit scores healed after a tumultuous past couple of years, an ugly truth surfaced….the foreclosure was not a foreclosure at all, it was still alive!
How to Stop a Zombie Foreclosure
The best way to prevent a Zombie attack is to be proactive, and get prepared. If the above story sounds familiar to you, and you think that there’s a possibility that a Zombie may be stalking you, there’s one way to find out for sure.
Ownership of real property is a matter of public record. These public records are made available when a deed of trust is recorded at the County recorders office, in the County where the home was owned. This record is known as a chain of title, which documents the ownership of a specific piece of property.
To discover whether or not a Zombie foreclosure is haunting you, you will need to look up the chain of title for the home that you thought was long in your past.
Lookup Chain of Title
Access public records online. Many Counties will give you access to a chain of title online either for free or for a small fee. If you are able to obtain a chain of title and are not completely sure how to read it, the next two options might be a great place to start.
A local real estate agent or lender will have a relationship with a title insurance company that they work with on a regular basis. Title insurance companies can easily access public records and provide you with chain of title.
Contacting a title insurance company directly is another way to request a chain of title. Most title insurance companies will have a customer service line and can get you the information you’re looking for.
You can go directly to the County Recorder’s office and request a chain of title on the property. The County Recorder may charge you a per copy fee for providing you with a copy of the chain of title.
If you find that you have a Zombie in your past, there are 3 things you can do to stop an inevitable attack:
- Contact the bank directly and ask if they will cooperate with a deed in lieu of foreclosure or short sale
- Consult a real estate agent that is a short sale specialist to contact the lender on your behalf
- Do nothing and hope that the bank will eventually foreclose on the home
The first 2 options are by far the best opportunity you will have for some control over the process of creating distance between you and the Zombies. In addition to having control over the timelines with a short sale or deed in lieu, recovering families may have the ability to buy again sooner than if you allow the bank to foreclose.
Zombie foreclosures are common after including a mortgage in bankruptcy. I have hundreds of stories from families that were told by their bankruptcy attorney that the bank would take the home back after including it in bankruptcy.
You will find many stories of families that have Zombies stalking them in the comment streams of these two articles.
- Mortgage Discharged in Bankruptcy is NOT Free and Clear
- Buy Again After Bankruptcy, Foreclosure, Short Sale or Deed in Lieu
If you have any questions about your own particular situation, feel free to review the comments in the above two articles (over 850 total comments) or feel free to ask a question below.