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Florida Zombie Foreclosures

September 2, 2013

From yesterday’s Florida Today: “When foreclosed owners walk, ‘zombie’ homes become nuisance” by Scott Gunnerson and today reprinted in USAToday with tagline:

A zombie-titled property is in a gray area between the homeowner and the bank that foreclosed on the home.

The article begins:

Zombies are everywhere lately, … You might even have a zombie next door. The first sign of trouble: An unmaintained yard, growing wild amid Florida’s summer heat and rain.

Defining “zombie properties” as:

“Zombie” properties — homes abandoned by the owners, but still not reclaimed by banks

Citing from the RealtyTrac data and quoting a RealtyTrac vice president:

Florida has the twin problems of a high foreclosure rate and a very lengthy foreclosure process,” said Daren Blomquist, vice president at RealtyTrac. “That means it is more susceptible to having these zombie foreclosures, because you have a homeowner who could be in foreclosure for two or three years and decides to walk away from the situation.”

Recall that this data used postal information – and the article says:

The problem is particularly acute in the summer when it quickly becomes obvious which homes are not being maintained.

OK, except it’s summer in Florida – doesn’t everyone try to abandon Florida in August? It’s hot as hell.

Recall from previous ZombieLaw: “Banker’s perspective on zombie foreclosures ignores bank’s fault“.

This new article by Gunnerson promotes the same ignorant rhetoric as if all disputes with banks mean the homeowners have permanently abandoned, as if there wasn’t a huge financial meltdown and a nation that bailed out banks but never helped the homeowners. Part of why Florida has such a long foreclosure process is because there are so many properties in the system and because the banks are not cooperating and some cases are being dismissed and not refiled. The banks continue to commit fraud, first with robo-signing and on some of these properties the bank probably doesn’t even have the proper paperwork to foreclose.

Remember, there are at least three types of Zombie Debt. With these properties in Florida, the debt is still real, no court has expunged it and the homeowners are still the homeowners, but the bank is refusing to deal. They have collateralized the debt obligations into securities, induced homeowners to default and won’t negotiate. They have an incentive to cause default but they don’t actually want the properties back yet. The banks don’t want to pay the property maintenance so they are keeping homeowners on the hook.

with a zombie, neither party will take responsibility and the city is left to maintain and place liens on the property.

and

Until a bank follows through on a foreclosure and accepts title of a property, an absent and unaware homeowner remains on the title and responsible for the property, even after going through bankruptcy.

The article uses fear tactics explaining that some zombie homes are a serious problem for the community, as breeding grounds for snakes, insects and crack-heads.

Another quote says the banks are sometimes actually getting their foreclosure judgments in court but then not completing the change of title. Concluding:

“The homeowner has no legal rights to the house, but because they are on the title, they have all the liability for what happens to the house,” Curtis said. “It’s a zombie title.”

But we must be very careful to separate these zombie properties from the situations in which the homeowners really do want their home back – even if they’ve temporarily abandoned, or filed bankruptcy, or refusing to pay current maintenance fees. How much money should they people waste if the bank’s refuse to deal? We need more options for those homeowners to refinance with principle reductions and other forms of debt relief (HAMP was insufficient!!!). The financial crisis hurt everyone, and we helped the banks, but now do we help the homeowners? Surely not by calling them zombies! The banks are the zombies!

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