Zombie Title: The Newest Threat to Homeowners in Florida Foreclosure Actions
We have written before about the problems facing homeowners who vacate their properties early in the foreclosure process. One of the least discussed, but most worrisome concerns associated with “walking away” from a property is the recent phenomenon known as “Zombie Title.” Zombie title occurs when lenders or loan servicers initiate a foreclosure action, complete most of the foreclosure steps, but then stop short of taking title of the property. In many of these incidences the homeowner has moved out of the property in anticipation of the foreclosure, and believes the foreclosure nightmare is behind them. However, they later find out that the house is still titled in their names, and thus still their responsibility.
Many times, Borrowers find themselves in a Zombie Title position because the judicial sale has been cancelled or postponed by the bank. While the occurrence of Zombie Title sounds innocent enough, the effects can be extremely detrimental to any Borrower. Most notably, Borrowers who have gone through the foreclosure process and vacated their home will later find that the bank never took title to the property and now the Borrower’s financial liability has increased due to interest charges, liens, taxes, etc.
The bank’s failure to take the title exposes the borrower to years of financial liability and subjects the home to continued neglect. As the condition of the property deteriorates the borrower’s financial liability increases as well. The increased financial liability often comes in the form of unpaid property taxes, municipal fines, and continued interest charges. Unfortunately for the Borrower, the liability remains with the homeowner, as the title remains vested in record owner until a certificate of title is issued and title changes hands.
Many Tampa homeowners may think that this could never happen to them. However, the problem is more rampant than anyone thinks. Of the estimated 90,556 vacant homes currently involved in the foreclosure process, it is estimated that as many as 39%, are homes on which the banks have either paused, or discontinued the foreclosure at some stage in the process. What’s more, the remedies available to Borrowers for Zombie Title issues are limited as well.
So what should homeowners do? The best way for homeowners to protect themselves from “zombie title” situations and other predatory lending practices is to have their foreclosure proceeding defended by a real estate attorney. Borrowers need to remain vigilant in regards to what stage of the foreclosure process they are in. If a judgment is entered against you, pay attention to the date set for the judicial sale and watch for a certificate of title to be issued. If a sale date is not set after judgment is entered, borrowers should move the court to set a sale date. If the sale date is subsequently set aside, borrowers should consult an attorney in order to evaluate their potential options.