Zombie Foreclosures Can Negatively Impact You
It may have been years since you stopped paying your mortgage and moved out of a home you believed would soon be subject to foreclosure. However, did you know that your name might still be on the title to that now-vacant home? The former owners and residents of the house may move out of the home after the initial threat of foreclosure, or when the owners can no longer make their mortgage payments, and leave the home before the bank takes possession. If the bank declines to take possession of the home, it becomes a “zombie.” This can lead to various negative consequences for both the neighborhood in which the vacant home is located, and the former resident of the home. Maryland has a particularly high proportion of vacant properties that are in some state of foreclosure, with estimates earlier this year of vacancy rates of 31% among all Maryland homes that are in some state of foreclosure.
Sometimes, banks may find it more advantageous financially not to complete the foreclosure process on a home for which they are no longer receiving mortgage payments. Sometimes the bank issues an initial notice of foreclosure, causing the residents to move, but the bank decides against foreclosing entirely on the property. Sometimes, the bank doesn’t immediately decide whether it wishes to foreclose on the home, or whether it would be more advantageous to simply write the home off as a loss and sell the debt to a collections agency, rather than face the slow-moving machinery of the foreclosure process.
There are several reasons you should remain in your home, even when you believe a foreclosure is imminent, where the bank has not yet attempted to take possession of the home. By remaining on the property, you can ensure that the home does not fall into disrepair, which could subject you to municipal fines, or even civil liability if someone is injured on your vacant property. You will need to continue paying for homeowner liability insurance until you are certain that the bank has taken title, and you will also need to continue paying property taxes in order to avoid a subsequent bill for unpaid taxes while the home remains in your name. Speak with an attorney if you believe that you may soon be foreclosed on, in order to know how best to proceed—or even to stop the foreclosure before it occurs.