Foreclosed Homeowners, Beware the Curse of the Zombie Title
Never turn your back on a home foreclosure with the assumption your property title is dead. It could reanimate as a zombie title, dragging hordes of bills and fines along with it.
A zombie title is stalking Joseph Keller, who vacated his home five years ago after receiving a foreclosure notice from JPMorgan Chase. Keller moved in with his daughter, assuming that his old home would be auctioned off any day. But weeks later, JPMorgan Chase changed its mind and filed for a dismissal of the foreclosure, leaving the title and mortgage in Keller’s name.
For nearly two years, Keller had no idea he still owned his home. He didn’t pay property taxes or try to catch up on his mortgage. He didn’t mow the lawn or protect the house from scavengers. The home crumbled, and the county eventually sued him for housing code violations. Then came the bills for cleanup, back taxes and long-overdue mortgage payments. And now, because the dilapidated home is still his asset, Keller has been declared ineligible for the disability benefits he was depending on to fund his life-saving liver transplant.
JPMorgan Chase says it mailed Keller a copy of its request to dismiss the foreclosure, but Keller said he never received it. Even so, the law doesn’t require lenders to notify homeowners at all when they change their minds about pursuing a foreclosure, so many of them don’t.
Leaving Too Soon
In most foreclosures, the homeowner retains the property title throughout the process until the home is sold and the title is officially transferred to a new owner. In the meantime, the homeowner is still responsible for property taxes and maintenance, regardless of whether he’s living in the home. If he turns his back on the property too soon, he’s flirting with the zombie title’s curse.
“Many homeowners leave their homes during the foreclosure process assuming they are doing the honorable and morally right thing,” Allan S. Glass, president of ASG Real Estate, told Forbes. “The unfortunate risks they assume are that someone takes possession of their home, damages the home causing additional loss, or that the house lingers in disrepair until it becomes a nuisance to their neighbors and city. All of these things could lead to a greater loss financially for the homeowner, or worse yet potential legal liability.”
In some municipalities, homeowners with zombie titles can even be placed on criminal probation for failure to maintain their property, and could face jail time if they don’t meet repair deadlines.
Zombie titles can plague home buyers, too. Wells Fargo foreclosed on Richard Riccobono’s Florida home in 2007. The bank later changed its mind and transferred the title back to Riccobono, but Riccobono never got the message. In 2010, Wells Fargo sold the home — which it didn’t own — to Brian and Holly Barnhart, who didn’t learn about the mistake until it was caught by the county property appraiser. The Barnharts now have hundreds of thousands of dollars tied up in a property they can’t even sell, because they don’t technically own it. The title is still in Riccobono’s name.
Stand Your Ground
Florida real estate attorney Roy Oppenheim warns homeowners that they should never rely on their lenders for complete, up-to-date information on their mortgages or foreclosures.
“We check our dockets regularly, often two or three times per month, because we don’t trust the banks to notify us properly about anything,” Oppenheim said. “Something’s going to fall between the cracks, invariably.”
While it’s never a good idea for homeowners to make assumptions about their foreclosure status, Oppenheim says the bigger mistake is vacating your foreclosed home prematurely. He says that remaining in the home for as long as possible will help maximize the chances that the lender will agree to a short sale or another arrangement favorable to the homeowner.
“Stand your ground,” he said. “Do not leave. Unless there is a sheriff’s deputy at your door, do not give in.”
Have you every been haunted by a zombie title? Tell us your story in the comments section below.