What is a zombie mortgage? Like the name implies, it is a mortgage that seemingly rises from the dead, long after the homeowner thought it had been satisfied or forgotten. Suffice it to say, it’s a situation no homeowner wants to find themselves in.
How a Zombie Foreclosure Works
A zombie foreclosure can come about because a bank decides not to complete a foreclosure on a home. This leaves the house in an unusual state. The homeowner might have moved out, thinking they no longer own the property, but legally, the title of the home still belongs to them. This situation can lead to significant problems for the homeowner, even as the house sits empty and falls into disrepair.
Additionally, because the original owners still legally own the house, they remain responsible for property taxes and fines related to its upkeep. Many people in these situations find out too late that they still own the house and owe thousands in back taxes and penalties. This can be a shocking and financially devastating discovery for homeowners.
Here’s how you can avoid this situation happening to you and what steps you can take if it does.
Receive a Preforeclosure Breach Letter
A zombie mortgage foreclosure starts when a homeowner receives a preforeclosure breach letter. This letter is a warning from the bank that the homeowner has not been keeping up with their mortgage payments. It tells the homeowner they must pay the past due amounts or face losing their home.
Apply for Loss Mitigation
Once the homeowner gets the preforeclosure breach letter, they can apply for loss mitigation. This is a process where the homeowner works with the bank to find a way to pay back what they owe and avoid foreclosure. This might include loan modifications to lower the monthly payments or setting up a repayment plan to the mortgage lenders.
Receive Notice of the Foreclosure and the Chance to Respond in Court
If the homeowner cannot solve the mortgage debt problem through loss mitigation, they might receive a foreclosure notice. This notice tells the homeowner they have the right to respond in court if they cannot pay the entire loan balance. Responding in court allows the homeowner to present their side of the story and try to stop the foreclosure. They can argue why they should keep their home and how they plan to catch up on missed payments.
Get Current on the Loan and Stop the Foreclosure Sale
The final step to avoid a foreclosure sale involves getting current on the loan. This means paying for all the missed payments plus any additional fees the bank requires. If the homeowner can do this, they stop the foreclosure sale and can keep their home as long as they continue to make payments on time.
If the homeowner cannot stop the foreclosure sale, the bank usually moves forward to sell the home at an auction. Sometimes, though, the bank might choose not to go through with the foreclosure sale even after starting the process, perhaps because repairing or reselling the home is too expensive. This can lead to zombie mortgages — or even 2nd mortgage foreclosure situations.
Contact Our Fort Lauderdale Foreclosure Attorneys for Help
Are you dealing with a zombie second mortgage or facing foreclosure? Is a debt collector harassing you about zombie debt? Contact Loan Lawyers today for a free initial consultation. Our team can help you understand your options and work with you to tackle any legal challenges with your property. If you’re struggling with unexpected mortgage debts or legal notices, our Fort Lauderdale foreclosure defense lawyers are here to assist you in resolving these issues effectively.
