Zombie Foreclosures – an Endless Nightmare

Are you still liable for the house you lost through foreclosure?

Are bills for water, sewer, HOA dues and property taxes accruing right now – in your name? Is the City preparing to sue you for letting the yard become overgrown and littered?

If yours was a zombie foreclosure, the answer is yes.

Zombie Foreclosures are one more reason why a short sale is the safest course of action for underwater San Diego homeowners who can no longer keep up with mortgage payments. A short sale the only option that is absolutely over when it’s over.

Here’s what happens in a Zombie foreclosure…

Homeowners who let their homes go into foreclosure often move out after the bank notifies them that the auction date has been set. They assume that on the date specified, ownership will have transferred from them to their lender. Unfortunately, that isn’t always the truth.

Banks do what they believe to be in their own financial best interests – without regard to how their actions will affect homeowners.

That’s why banks, in their quest to avoid costs, sometimes do not complete the foreclosure process. Instead, they postpone the auction date. That lets the bank off the hook for property taxes, city services, and homeowners’ association dues. It also absolves them of responsibility to maintain the house and grounds in keeping with neighborhood standards.

In the $25 billion settlement with the state attorneys general in 2012, the nation’s five largest mortgage lenders agreed to inform borrowers of any decision to forgo or delay a foreclosure. But they don’t always adhere to that promise, and homeowners don’t always read their mail.

And therein lies the nightmare.

Thousands of homeowners who believed that they no longer had any legal interest in their homes are now being presented with bills from cities, counties, and homeowner’s associations – where property taxes, water and sewer services, and dues have not been paid since the homeowner moved away. In some cases, where an abandoned home has been vandalized and/or the properties have been left to the forces of nature, cities are also looking to the homeowner of record to make repairs, clean up the yards, and bring the homes up to neighborhood standards.

It gets worse…

In other cases, the banks take title, then simply don’t do the paperwork correctly. So while the former homeowner believes they’ve been cleared of the debt through the foreclosure, the banks are still reporting to the credit bureaus, claiming thousands of dollars still due and owing. The result is that no matter how well that homeowner has taken care of bills since the foreclosure, their credit scores remain in the gutter.

A second problem rears its ugly head when former homeowners are hit with judgments against them for the 2nd and even 3rd liens against the property. Banks don’t have to take immediate action when they decide to collect, so it could be 2 or 3 years before that former homeowner realizes that his or her secondary liens were not wiped out by the foreclosure.

What’s the solution?

If your home has already been foreclosed upon, check with your county tax assessor’s office to see whether they still show you as owner. Also check with your homeowner’s association to verify that ownership has legally been transferred to the bank. If not, call us for further assistance to determine the outcome. We have access to software and data that is more up to date than the public data banks.

If you’re underwater and behind on payments right now, choose the only SAFE solution: List your San Diego or San Diego County home as a short sale.

The short sale process will absolutely transfer ownership from you to your buyer. In addition, none of your lien holders will be allowed to sue you for a deficiency. When it’s over – it will be over.

You won’t suddenly – 2 or 3 years down the road – find yourself facing Zombies.

You’ll be able to get on with your life, begin rebuilding your credit, and purchase a new home within 2 or 3 short years.

So if you’re behind, call us today. We’ve helped thousands of San Diego homeowners avoid foreclosure – and we’d like to help you too.

You can reach us by writing td@tomdunlap.com or by calling 619-929-1413.


Please note that the information provided on this San Diego short sale page is generic, academic information used for general information purposes and may not be construed as or relied upon as a promise for a specific outcome.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.