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« Congressmen Introduce Bills To Legalize Pot - And Tax It! | Main | OBummer: Prez Turns Out To Be Just Another Drug Warrior »
Wednesday
Feb202013

BANK FRAUD: The Rise Of Zombie Foreclosures

A new form of bank fraud is sweeping the land.

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Zombie Foreclosures: Borrowers Stuck With Debts That Won't Die

CNN Money

Borrowers are discovering that their foreclosed homes are coming back to haunt them, long after they have moved out.

In these "zombie foreclosures," borrowers move out after their bank schedules a foreclosure auction only to learn months or years later that the auction never took place or the bank never transferred the deed.  That means the borrower still technically owns the house and is on the hook for property taxes, fees and homeowners' association dues.

Since the housing bubble burst seven years ago, almost two million properties have started but never completed the foreclosure process, according to RealtyTrac.  While no one knows the exact number, it's estimated that tens of thousands could be zombie foreclosures.

Many of these homes are in low-income communities where foreclosures are so difficult to sell that lenders sometimes delay taking possession to save on taxes and other costs that then stay under the borrower's name.  Those debts can then go unpaid for years because the borrower is unaware they owe them, further slamming their credit score and making life after foreclosure even harder.

Bill Purdy, a real estate attorney in Soquel, Calif., said borrowers can't always trust lenders to file foreclosure paperwork properly.  In November 2011, when his client Christopher Warner's Felton, Calif., home was auctioned off, his mortgage debt was fully extinguished -- standard practice based on California law.

Warner's lender, however, recorded $120,000 on its books as debt -- the difference between what he owed and what the house sold for -- and gave it to a collection agency.

In a $25 billion settlement with the state attorneys general last spring, the nation's five largest mortgage lenders agreed to inform borrowers of any decision to forgo or delay a foreclosure.  But victim's attorneys said the banks have not been careful about following that policy.

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Reader Comments (3)

At what point is there going to be blowback? I mean for the love of all that is good. They get fucked outta their homes, money, jobs, and now this. Jesus Christ Almighty!!! These miserable sons of bitches.
Feb 20, 2013 at 9:14 PM | Unregistered CommenterSKINFLINT
At what point is there going to be blowback?

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That's the key...and the answer is not anytime soon. Banks control Washington so nothing gets done. Neither party is willing to hold them accountable, so the beat goes on, and on, and on.
Feb 20, 2013 at 9:21 PM | Registered CommenterDailyBail
WTF! When they receive a foreclosure, sell all the unnecessary crap one has accumulated ,store all the other treasures(junk).
Pay the taxes & HOA fees & live without a payment. Force the foreclosure. Go to the foreclosure sale. Verify the deed transfer. If there isn't a transfer & one has moved tell the bank you are moving back into the house. Wonder if the deed will be transferred the next day? This may be a little simple but one might get the banks attention.

Oh wait! The owner is never responsible for anything that happens.
Feb 21, 2013 at 12:27 AM | Unregistered CommenterTR

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