When the housing market crashed in 2008, a curious monster arose from the depths of America’s economic wasteland: the zombie home. But as the economy strengthens (tentatively), home prices are rising, and the zombies are waking up! If you’ve got a zombie-home problem, a Utah Bankruptcy Lawyer may have your solution!
Ok, you’ve got my attention. What is a ‘zombie home’?
A ‘zombie home’ is a home that is stalled somewhere in the process of foreclosure. The home is languishing between the default and repossession or sale by the bank.
Why, you might ask, would a bank fail to follow through on foreclosing on a house? The answer is that because home prices decreased so much when the housing market crashed, banks were sometimes better off not foreclosing on the house and carrying the loss on their balance sheet instead. In other words, the house may not have been worth enough to sell.
At the height of the housing market crisis, there were 300,000 or more zombie homes located throughout the United States, including here in Utah. Now that housing prices are rising, the ‘juice’ of foreclosure is beginning to be worth the squeeze for banks. The estimated zombie home numbers are now around 120,000 and falling fast.
Why is a zombie home a problem?
For starters, zombie homes are bad for the housing market and the areas they’re located in. In most cases, former owners who have been foreclosed on have moved out of zombie homes, and they are simply sitting there empty. They can become blights, lower surrounding property values, and attract squatters.
Of course, no one wants a property-value-sucking blight around; but that is not a direct problem for you, the home owner, who is facing a zombie home problem. If your home becomes a zombie home, you do face serious, direct problems, however. Because the bank has not taken possession or sold the home, you may still be on the hook for property taxes, HOA fees, municipal fines, utilities, trash removal, etc., etc. Even though you don’t live there! Furthermore, you might face liability for injuries or damages that occur on the property.
In some cases, former owners are still occupying zombie homes, because the bank has not taken possession of them yet. In this case you may have a different kind of zombie home problem: sooner or later the bank will be coming around to foreclose the property you’re living in, now that the housing market is recovering.
How can a Utah Bankruptcy Lawyer help?
If you’ve exhausted all efforts to refinance, restructure, or otherwise settle your defaults and arrears with the bank who holds your mortgage, then you have one final, absolute, powerful remedy to prevent a foreclosure: chapter 13 bankruptcy. You can file a chapter 13 bankruptcy any time before a foreclosure sale occurs to save your home.
A zombie-home foreclosure is just like a regular foreclosure. If the bank has sent you a notice of default, but hasn’t held a sale yet, you can file a chapter 13 bankruptcy petition, stop the process, and force the bank to allow you to cure the arrears according to your budget!
This way you don’t have to worry about liability for taxes, fees, fines, and damages; and you don’t have to leave your home!
So, if you find yourself with a zombie-home problem, please come talk to us! We’re Utah bankruptcy lawyers, and this is what we do!