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Zombie foreclosures: Borrowers hit with debts that won't die
Borrowers are discovering that their foreclosed homes are coming back to haunt them -- long after they have moved out.
In these "zombie foreclosures," borrowers move out after their bank schedules a foreclosure auction only to learn months or years later that the auction never took place or the bank never transferred the deed. That means the borrower still technically owns the house and is on the hook for property taxes, fees and homeowners' association dues.
Many of these homes are in low-income communities where foreclosures are so difficult to sell that lenders sometimes delay taking possession to save on taxes and other costs that then stay under the borrower's name.
Those debts can then go unpaid for years because the borrower is unaware they owe them, further slamming their credit score and making life after foreclosure even harder.
Mustapha Sesay, a 45 year-old father of two, thought he had lost his Brandywine, Md., home in 2008. But two years later, a debt collector called telling him he owed $70,000.
The holder of his second mortgage had never forgiven his debt -- even though the lender holding his primary mortgage had foreclosed on the home.
Typically the second mortgage holder is out of luck if there isn't enough cash from the foreclosure sale to pay off both the first and second lien, said Cheryl Cassell, director of the housing counselor network for the National Community Reinvestment Coalition. But, depending on state law, second mortgage holders can sue homeowners to pay off the notes -- even after they lose the home in a foreclosure or the lender can sell the debt to a collection agencies.
Why should we stop short of stringing them up????
Originally posted by RoScoLaz
such lovely people these financial gangsters. short of stringing them up, i don't foresee any curtailing of their despicable greed in the near future.
Originally posted by Hopechest
I really don't understand all this hate towards banks.
Sure the issue with the taxes is a bit underhanded but foreclosing doesn't seem to be. I mean these people bought the house, entered into a contract, and they didn't pay.
Is it really the bank being greedy by taking back what is essentially theirs?
As far as I know, the banks are not doing things that make people lose the ability to pay their mortgages are they?
Originally posted by Hopechest
I really don't understand all this hate towards banks.
I mean these people bought the house, entered into a contract, and they didn't pay.
Is it really the bank being greedy by taking back what is essentially theirs?