How to Kill a Zombie (Foreclosure) in Your Neighborhood

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Zombie Attack
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Millions of us love zombies in the movies or on "The Walking Dead," but when they start showing up in your neighborhood, that's where the fun ends. And if you think rotting corpses are scary when they start moving around, they're almost as bad when they're houses people moved away from.

Of course, I am referring to zombie foreclosures: properties where a foreclosure was initiated and the homeowner has walked away, but the bank hasn't completed the process, leaving it in limbo for months or even years. In general, the former occupants don't even realize that, technically, they still own the house.

The problem with these undead domiciles is that, once abandoned, they quickly fall into disrepair and become targets for vandalism, graffiti and squatters, all of which can bring down the value of surrounding homes.

According to Realty Trac, one out of every five homes currently in foreclosure is a zombie property, and in certain metro areas in states like Florida and Nevada -- hit especially hard when the housing bubble burst in 2008 -- that number can be as high as one out of three.

If you have a suspect property in your neighborhood, there are a few things you can do to confirm it's a zombie foreclosure.

First, search for a foreclosure file at your local courthouse or recorder's office. You'll want to pay attention to the date of the last recorded action on that file, and what type of action it was. If you see either an "Order of Sale" or a "Postponement of Sale" as the last action and it is more than 90 days old, you might be dealing with a zombie foreclosure.

Next, contact the utility companies and ask about the account status of the property in question. Though it's not a definitive indicator, homes with no water or power are very likely to be vacant.

Finally, do a visual inspection of the property, ideally with some like-minded neighbors. Obviously, an overgrown yard, accumulated debris, broken or boarded up windows, padlocked doors, signs or notices from servers, will serve to indicate the property is abandoned.

If after all this, you're still not sure if you are dealing with a zombie, conduct a title search to determine the ownership status –- something many neighborhood real estate agents will be happy to do for you.

Aim for the Brain

Once you've determined that you are in fact dealing with a zombie foreclosure her are some potential ways you can kill it.

Notify local contractors, developers, or community redevelopment firms about the property. Zombies can be ideal investment candidates for folks who specialize in rehabbing and flipping homes.

Also, check your state and local laws regarding foreclosures –- something, once again, that a friendly local real estate agent can help you with. Some areas have laws on the books that require a foreclosure to be completed by the note holder within 90 days of the original sale date.

If this is the case in your area, and the property is past that 90 day mark, contact the servicer of the loan. Most major servicers have a property preservation department, so notify them that their zombie is on the loose. The civil codes vary, but in general, if the note holder fails to follow through on a pending foreclosure, it can be fined. That's usually enough to light a fire under a bank, but if it still doesn't take action, you can then file a complaint against it with the Consumer Financial Protection Bureau.

If none of these actions gets the problem solved, your final option is to petition the Clerk of the Court to order the completion of the foreclosure. This course requires legal representation, so you will have to either contact your local city official or an attorney to more the process forward.

In all cases however, the more people you have on your side the better your chances are. Agencies, officials, and even banks are more likely to respond to your requests if they know you have a large number of voters and consumers standing behind you. So get your fellow homeowners together and get organized. As the band of survivors on "The Walking Dead" knows all too well, it takes a team to effectively fight off zombies.

No man is an island, or even a peninsula, so I encourage your feedback in the comments below. And don't forget to pick up my book, "Trading: The Best of the Best -- Top Trading Tips for Our Time."

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9 Comments

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Marvin Harrison

That sounds like a lot of work. Just change the locks, clean it up a little and rent it out until the bank gets around to sell it.

March 30 2014 at 5:45 PM Report abuse -1 rate up rate down Reply
kcanpa2_kenneth

Perhaps the banks and investors need to take responsibility for their problems rather than being bailed out.

March 30 2014 at 11:40 AM Report abuse +1 rate up rate down Reply
progressivehoax

The whole state I live in is full of Obamazombies.

March 30 2014 at 11:19 AM Report abuse rate up rate down Reply
ectullis

Are Zombie Foreclosures Lurking in Your Neighborhood? Yes lots. (pun intended)

March 30 2014 at 8:28 AM Report abuse +1 rate up rate down Reply
asmith4062

Where is spontanious combustion when you need it?

March 30 2014 at 2:10 AM Report abuse +1 rate up rate down Reply
rball84213

IMO your article is overoptimistic because mortgage foreclosure completion does not reoccupy a dwelling; there is a money shortage, not a dwelling shortage. Builders in my area purchase dilapidated dwellings to renovate on a "time and resources available" basis. In a real estate slow market builders do not invest heavily in dwelling renovation. Some of these dwellings sit unoccupied for years or even for decades; infrequent lawn mowing is the only ongoing maintenance.

March 29 2014 at 11:47 AM Report abuse +5 rate up rate down Reply
davefromfwb1

On my street here in Florida there were 6 of these houses on my street. 3 of them have sold already but what's worse than Zombie Houses are the "stupid dreamer Flippers" who think they know what they're doing and come in and tear the house all apart...only to realize they don't know what their doing and abandon it or run out of money half way thorough, then what do you do? We're nowhere near out of this housing problem yet...we still have 10 years to go before the people who've been paying on upside down houses...give up and walk away.

March 28 2014 at 6:45 PM Report abuse +6 rate up rate down Reply
RMS

A big part of the problem are the banks themselves that hold the mortgages. They are unwilling to help the homeowner avoid foreclosure by offering refinancing options or help them through a short sale. Citi Residential lending pulled this on me when I tried to work with them on a short sale. They dragged their feet on the offers that came in, and all the potential buyers went elsewhere when they grew tired of waiting. Citi would not work with me on a refinance since there wasn't any equity in my "upside down" property. Eventually I walked away, they foreclosed after a year, and got less for the house at a foreclosure auction than they would have gotten on the short sale. I have no sympathy for the banks. BTW, my loan was not a "sub prime" loan, I had great credit and 25% down when I bought the house.

March 28 2014 at 5:57 PM Report abuse +2 rate up rate down Reply
2 replies to RMS's comment
emoore2927

They should be offering very favorable terms on refi's. It would be nothing but a win-win for the bank and the homeowner.

March 28 2014 at 6:11 PM Report abuse +2 rate up rate down Reply
biwatch69

Exactly why is it our fault that you paid more for a house in the go go economy days, than what it was worth? Pay your bills you piece of garbage. People like you are the reason we have no economy. Stop looking for a handout or forgiving debt...PAY YOUR BILLS. I have been paying my mtge for almost 15 years, and while I have equity, I am not studying the market price on a daily basis. Pay your bills. In addition to your sacked credit score, I sure hope the IRS sacks you for the bad debt.

March 28 2014 at 11:33 PM Report abuse rate up rate down Reply
thefacts22

Democrats say that our economy is "growing"

March 28 2014 at 4:22 PM Report abuse rate up rate down Reply
2 replies to thefacts22's comment
gildersleeve9

Yea the government debt is growing

March 28 2014 at 7:25 PM Report abuse +1 rate up rate down Reply
marcanagnos

Growing into a socialist state.


MARC

March 28 2014 at 8:39 PM Report abuse +4 rate up rate down Reply
1 reply to marcanagnos's comment
redstateredneck.hillbilly

socialist state ? More free stuff for us uneducated conservatives.

March 29 2014 at 10:30 AM Report abuse -2 rate up rate down
ectullis

There were two next to me

March 28 2014 at 4:09 PM Report abuse +2 rate up rate down Reply