Archive for January 13th, 2013

Zombie Titles – The Moral of the Story

Have you seen the article about zombie titles that’s been making waves in foreclosure defense circles?  The story is an all-too-common one, but everyone is misunderstanding the moral of the story.

A “zombie title” begins when a homeowner walks away from home, thinking he’s about to be foreclosed.  Often, however, as the story explains, the bank doesn’t finalize the foreclosure, so title remains in the homeowner’s name.  Unfortunately, by the time the homeowner realizes he’s still on title, the house is destroyed and the homeowner remains on the hook for thousands of dollars in expenses associated with home ownership.

Sounds bad, right?  That’s the media’s angle, to feel bad for the poor homeowner who walked away and is still getting billed because the bank won’t finalize the foreclosure.  The media also seems to be criticizing the banks for not finalizing the foreclosures.

I’m all for criticizing banks.  But should we be criticizing here?  Is this all bad, as the media suggests?  Let’s stop and think about this.

As things unfolded for this homeowner, it’s bad that he retained title and has some expenses associated with a house in which he’s no longer living.  But what if he made a different decision?  What if, instead of moving out and giving up on the house, he kept living in the house until the foreclosure was over?

If he hadn’t given up, and hadn’t just walked away, then he would have realized the bank didn’t finish the foreclosure and could have kept living in the house.  For free.  For years.  Eventually, he would have realized the bank decided not to finish the foreclosure.  Do you think he would have been upset then?  Hell no – he’d have had a free house (if not permanently, then for a long, long time).

Apparently, banks are doing this more and more – choosing to just walk away from their mortgages.  So you tell me, who’s the crazy one – the banks, not finishing the foreclosures?  Or the homeowners who walk out and give up when the foreclosure isn’t over?

In my experience, banks completely walking away from their mortgages is not terribly common.  However, it does happen.  It happened on a case of mine a few weeks ago.  So who’s to say it won’t happen more in the future?  Who’s to say it won’t happen on your house?

Even if the bank doesn’t simply walk away from your mortgage altogether, who’s to say it won’t fail to finalize your foreclosure for many months or years?  I have a friend who was foreclosed over two years ago (he didn’t retain counsel), but is still living in the house as the bank refuses to set a foreclosure sale.  Situations like that, in my experience, are far more common.

I’m not saying I’d plan on the bank walking away.  However, if there’s a moral to the “zombie title” story, it’s this – don’t give up.  Don’t give up on your house until the foreclosure is 100% finalized.  That’s the moral of this story … if you keep fighting, maybe you’ll be one of the lucky ones.

Mark Stopa

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