Arizona residents may have read zombie books and seen zombie movies, but they may have never heard of zombie titles. Spawned from the housing market crisis, this new phenomenon has meant American homeowners were liable for houses they didn't even know they still owned.
In the last six years, more than 10 millions homes have been foreclosed upon. These numbers include fraudulent mortgages banks created to drive homeowners out of their houses and those homeowners who are living in their houses on borrowed time. Unfortunately, they may not be aware that filing for Chapter 7 bankruptcy puts an automatic stay on foreclosure proceedings and wipes out most bills, giving homeowners much needed space to breathe.
And then there are the zombie cases-homeowners vacate their houses after receiving foreclosure sales notices, thinking they are leaving their house in the bank's hands but the banks change their minds and abandon foreclosure proceedings.
When that happens, homeowners find themselves legally liable for maintaining the houses-bills for trash removal, painting, demolition crews and lawn clipping, pile up. Their wages are garnished and they are subjected to creditor harassment for the house they thought they had left behind.
Even though banks previously used to follow through on foreclosure proceedings, more and more they are abandoning the process after realizing they may gain more financially by simply documenting the loss rather than selling the house.
Researchers have discovered banks do not have to inform homeowners of their intention to forego foreclosure proceedings, so homeowners are not aware of their legal responsibility for a house they may no longer have a right to.
Like the victims of this latest zombie attack, Arizona residents struggling with their mortgage payments and other bills should keep their mind open to all options, including filing for Chapter 7 bankruptcy. Not only does it put an automatic stay on foreclosure proceedings, filers may also be able to retain possession of their house and household possessions up to a certain limit.
Source: Financial Post, "The latest U.S. foreclosure horror story: curse of the zombie title," Michelle Conlin, Jan. 10, 2013