The foreclosure crisis that began back in the fall of 2007 is still haunting many homeowners. It’s rocked the real estate industry to the core – spawning new home loan qualification guidelines and new foreclosure laws – giving everyone pause as to what to do during every step of the foreclosure process way.
The Old Way: What You Used to Have to Do When You Received a Foreclosure Notice
In the “old days” (ie, before the foreclosure crisis hit in full), if you received a foreclosure notice, you’d likely pack your bags and move if you couldn’t afford to catch up your mortgage because it was a sure thing that your lender was going to move ahead with foreclosing on you.
This isn’t true any more.
The New Way: How to Handle It When You Receive a Foreclosure Notice
Nowadays, lenders aren’t necessarily moving ahead with foreclosure proceedings. And this is what many homeowners don’t realize – and if they did it could save them so much headache (not to mention money).
So if you receive a foreclosure notice, it doesn’t necessarily mean you’re days or weeks away from losing your home. In fact, it could mean that you’re years away – that’s right, years!
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Zombie Foreclosures: A Blessing or a Curse – Depending on How You Look at It
It’s because of what’s being called “zombie foreclosures.”
What Is a Zombie Foreclosure?
As discussed in the Bloomberg.com article, Special Report: The latest foreclosure horror: the zombie title, it’s technically when banks walk away from a home (ie, fail to complete the foreclosure process). It leaves the title in a “zombie” state because the homeowners are still legally liable for the property, but the bank owns the note and can still exercise their right to foreclose at any time.
Many homeowners leave their property soon after receiving a foreclosure notice, INCORRECTLY assuming that when they received the notice, they no longer owned the property and/or that the bank would complete the foreclosure process and take the home away from them (ie, get it out of their name).
But, many lenders don’t. Many banks just quietly walk away from these “would be” foreclosures – NOT completing the foreclosure process and leaving many homeowners in legal limbo.
And this is where the trouble begins for many homeowners facing foreclosure, as discussed in heart-wrenching detail in the Bloomberg article mentioned above, ie:
The Kellers [homeowners facing foreclosure] are caught up in a little-known horror of the U.S. housing bust: the zombie title. Six years in, thousands of homeowners are finding themselves legally liable for houses they didn’t know they still owned after banks decided it wasn’t worth their while to complete foreclosures on them. [emphasis added]
With impunity, banks have been walking away from foreclosures much the way some homeowners walked away from their mortgages when the housing market first crashed.
A “Foreclosure Notice” Does Not Necessarily Mean That You’re Going to Lose Your Home
Many homeowners report having received numerous foreclosure notices – then they hear nothing else from their lender for months – in some cases years. So stay put. Don’t leave your home – even if you’re unable to pay the mortgage.
Facing Foreclosure? Don’t Leave Your Home Unless and/or Until . . .
1) The bank completes the foreclosure process; and/or
2) You receive a sheriff’s notice saying that a sale has been completed and you have X number of days to vacate.
If this happens, then it’s time to go. Otherwise, take a foreclosure notice seriously, but don’t pack your bags just yet.
Facing Foreclosure and Living Rent Free – for Years?
The reason is not to “live free,” but to protect yourself from future financial headache which could prevent you from not only ever buying another home again, but rack of thousands of dollars in debt.
As we discussed last year here in the post, What to Do When You’ve Stopped Making Mortgage Payments, But the Bank Won’t/Hasn’t Foreclosed, one of the advantages of staying put is that you may very well be able to keep your home.
The foreclosure crisis has created situations that most of us have never dealt with before, this includes real estate professionals like loan officers, foreclosure attorneys, bankruptcy lawyers and real estate agents.
Read this post on foreclosures and bankruptcy. It highlights some conflicting advice given by bankruptcy attorneys. The advice wasn’t mean to be malicious; it’s just that – again – the foreclosure crisis has brought on situations nobody in real estate has ever been confronted with before. So, it’s like the wild, wild west – everyone’s trying to figure it out as they go along.
And this might be the best reason of all to stay put if you receive a foreclosure notice – until you can get yourself detached from the legal responsibility of owning the property.
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Copyright © 2013 Yuwanda Black for Foreclosure Business News. Legal Disclaimer: The information dispensed on this blog is not to be taken as legal advice; it is for general purposes only. Please consult a qualified professional (eg, attorney, accountant, real estate agent, etc.) — in your jurisdiction — before taking any action based on the information listed here.