Beware: Zombie Foreclosures Haunting Homeowners

DETROIT (WWJ) – It’s a problem now affecting thousands of people who’ve lost their homes. WWJ’s Sandra McNeill reports on the phenomenon known as the ‘zombie foreclosure.’

Mark Gilman from Decus Consulting says a zombie foreclosure is when a homeowner walks away from their home but the tax debt isn’t dead.

“The banks are not starting the process immediately and what happens is a year later they get a tax bill and they can’t understand why? The reason is because the house was never actually put into the foreclosure process,” notes Gilman.

Gilman says because the markets are so bad the banks are holding on to a lot of these foreclosed homes.

“The banks are making the calculated financial decision ‘I’m going to have a really hard time selling this home,’ even a foreclosure, because it’s in a bad area,” he said.

“The banks hold these properties as long as they possibly can before they release them, so there is an entire inventory we’re not even hearing about.”

Having that extra tax bill is putting an extra hard hit on the homeowners credit.

“The homeowners think that just because they walked away from a property they are done – it affects people in the neighborhood and to not even make a phone call is irresponsible,” said Gilman.

Gilman recommends that homeowners call their bank to make sure the foreclosure process has begun because technically they still own the home and owe the property taxes.

“They’ve got a huge inventory, not enough people to manage it and it’s up to the homeowners to make sure that this is processed.”

More from Sandra McNeill
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