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Avoiding Zombie Title Pitfalls

Avoiding Zombie Title Pitfalls


According to a 2009 -RealtyTrac study, foreclosure filings increased by more than 81 percent in 2008. This means that just over 860,000 families lost their homes when they were unable to keep up their mortgage payments.

In Illinois, 32,000 homes were trapped in a situation where ownership of the home (and bills associated with said ownership) was unclear.

Banks’ failure to follow through

Many homeowners in Illinois, unfamiliar with the foreclosure process, assume when they receive a foreclosure notification from their bank that they must move out of the home immediately. Therefore, they pack up their belongings and leave, believing that they no longer have any legal ownership of the property.

However, in many cases, banks have failed to follow through with the foreclosure process or notify property owners that the foreclosure is not proceeding. The homes then sit empty for months and are often used by vandals, squatters and drug dealers who destroy any value left in the home. The owners only discover that they are still legally and financially responsible for the property when they receive notice for taxes or bills from the city for property maintenance, demolition costs or repairs.

The zombie title

These titles are referred to as zombie titles because of the devastation they have caused to property owners. The owners find that they are haunted by a property they thought was taken over by the bank. This can cause a legal nightmare as owners find themselves sued by the city or county for additional bills on the property. Furthermore, the property is no longer of any worth, making it impossible to sell, but the mortgage owed on the home remains.

In order for homeowners to protect themselves from the ravages of zombie titles, they must be proactive when it comes to a foreclosure. A few suggestions are as follows:

  • Assumption – When faced with a notice that one’s residential property is going to be foreclosed upon, homeowners should avoid acting with the assumption that the process is immediate. The name of the owner, and all associated taxes, costs and fees, remain on the title of the home until a sale is accomplished. People should remain in their homes until the legalities are settled.
  • Modification – Many banks today would rather assist a homeowner with some type of loan modification than process a foreclosure.
  • Follow up with the bank – When people receive a foreclosure notice they should contact the bank and stay in contact with the bank until the foreclosure is completed.

Knowing your rights as a homeowner is more important today than they have ever been. New rules from the Consumer Financial Protection bureau and federal reparation settlements have changed the way foreclosures are processed and have given struggling homeowners more avenues of recourse. A reputable property attorney can help you also understand your rights.

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