Dawn of the Dead (Mortgage): Zombie Foreclosures are Back!
Roy Oppenheim’s commentary was originally published on Yahoo Homes! and is being redistributed on South Florida Law Blog with their permission
Like Freddy Krueger, Jason Voorhees, and Jigsaw, they just keep coming back, even though no one really wants them to. And even when the homeowner manages to escape a “haunted” home, it isn’t always the end of the story — case in point, the story of Joseph Keller, victim of the newest villain, the “Zombie Title.” Even for those with a strong stomach, stories like this will make your head spin. He was evicted from his Ohio home, or so he thought.
He received word from his lender that his home was being put up for auction, and so he left. Except the sale never happened, and now the debt collectors are coming after him for back taxes, sewer removal, and other bills because the home is still in his name.
It’s a limbo where your mortgage keeps coming at you, even from beyond the grave.
As an attorney I’ve been dealing with zombie foreclosures for a number of years. A zombie foreclosure starts out like any other case.
Many times we’ve been successful in getting the foreclosure dismissed because of illegal or egregious conduct by the banks for various reasons, such as the lender’s counsel failing to prove that they owe the note or that the transfers were done properly.
Or perhaps there was robosigning or fraud or some other technical, legal, or constitutional reason why the foreclosure was bad. And in at least 20 percent of those cases, the case gets dismissed.
Just as the fourth “Friday the 13th” movie wasn’t the “Final Chapter,” even though it was titled as such, a judgement in our favor isn’t always the last nail in a foreclosure’s coffin. When a foreclosure action gets thrown out, we are typically entitled to attorney fees. The bank is not permitted to re‑file the foreclosure until our fees as well as new filing fees are paid and the borrower is served again.
And once that happens, lenders go right back into the foxhole.
These banks try to re‑foreclose on those very same properties. Hence why they are known as zombie foreclosures — they were once dismissed and are now back from the dead.
When judges complain about the glut of foreclosure cases clogging their courtrooms, they should be directing their wrath at lenders who keep bringing old foreclosure cases back to the docket or looking in the mirror and asking themselves why they didn’t slam the coffin door shut.
Lately I have seen a major influx of these types of cases on a daily basis. On top of the zombie cases, we’re also now finding grave robbers.
Grave robbers are banks who despite having already foreclosed on the property, keep coming back to the cemetery. They are looking to grab whatever loose change they pull off a corpse, even if there is nothing left to find.
The majority — an estimated 98 percent — of homeowners who lost their homes to foreclosure assumed their nightmare was over. Some of them just want to move on. They didn’t fight the bank and they let the bank take the property (something I never recommend).
But the banks sometimes get judgments against these homeowners, and surprise, surprise, they are coming back with full force trying to garnish wages, freeze people’s accounts, and actually pursue the deficiency judgments.
Even when the foreclosure rate was on the decline, I had always worried these cases were still out there waiting to strike. With the economy on the rebound, banks are steamrolling homeowners all over again.
Bankers seem to feel like they have some kind of political cover because of all these settlements, so once again all bets are off.
Perhaps they no longer really need to protect the president and his back, in part because the election is over. Or maybe it’s because now that the economy is improving, they’re focused again on trying to maximize profits for their shareholders. So people who put their head in the sand like an ostrich are sadly realizing they made the wrong choice.
They thought their problems had gone away, but when it comes to foreclosures banks are like elephants: They never forget (unless of course they forget to find a mortgage document or a signed promissory note!).
And now for the next 20 years here in Florida, unless these people file for bankruptcy (and in some cases even that won’t slow the banks down) they will be hunted down like a wounded dog.
Just ask Keller, who because the home is still in his name, can’t apply for needed disability benefits.
So when I talk about standing your ground, realize that I’m not just talking about defending your case in court. You must remain ever vigilant, even if you’ve moved out or moved on with your life.
For you never know when those nasty grave robbers or zombies will target you next.
Real estate attorney Roy Oppenheim left Wall Street for Main Street, founding Oppenheim Law along with his wife in 1989 in Fort Lauderdale, Florida, and is vice president of Weston Title. He is also creator of the South Florida Law Blog, named the best business and technology blog by the South Florida Sun-Sentinel.