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The prevalent problem of the zombie title

Homeowners in Washington, D.C., who fall on hard times may find themselves receiving a notice of foreclosure. Upon receipt of such notice, they pack everything, move out, and believe that the house will be sold at auction. However, in some cases, banks fail to follow through on the foreclosure and the homeowners become the victim of the zombie title.

National Mortgage News states that many lenders will simply walk away from a property if it is of low value rather than go through the process of completing the foreclosure. The problem is that home owners are not being told that the bank has changed its mind. Owners believe that they are no longer legally responsible for the home and only realize that is not the case when a lawsuit has been filed against them from the local municipality or they start receiving bills for the property.

By this time, the home has sat vacant for some time and has been damaged by vagrants breaking into it. The home has been stripped of wiring, the carpets are in dreadful condition, and the lack of care may have led to structural issues. In such a condition, the home is not sellable and the costs of repair are too high for the homeowner to bear. Reuters points out that homeowners who become the victim of these zombie titles often are hit with cleanup bills for the property, including service bills for lawn care or trash removal. They can also face more severe penalties, losing their tax refund or having their wages garnished before they are aware of the situation. In some situations, home owners can also face the possibility of time in jail.

Homeowners can protect themselves from zombie titles by staying proactive. When they receive a notice of foreclosure with a date of sale, they can follow up with the sheriff’s office to ensure that the auction was actually held. Owners should also make sure that they stay in communication with the lender, checking on the status of their mortgage and the home’s title. If it becomes clear that the foreclosure is not going through, they may want to either lease the home or move back into it to prevent damage from squatters and drug dealers while they determine the next steps they should take. 

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