A Zombie Mortgage is when a homeowner falls behind on mortgage payments and leaves the home. Those in zombie debt assume the bank will go forth with foreclosure, but these suddenly resurface. If the bank does not complete the foreclosure, the homeowner remains legally responsible for the property AND the mortgage. This is not very economical as unpaid taxes, insurance, and maintenance costs accumulate under your nose.
If you have discovered that you have a zombie mortgage, it is essential to understand the right steps to overcome this issue. First, you will need to verify the status of your mortgage by contacting your lender and checking public records. You must request detailed information about your mortgage, such as outstanding balances and foreclosure status. You can also check the property’s status through public records.
Next, it is essential to contact a housing counselor; these counselors can provide low-cost advice that allows you to understand your rights and navigate through other options. You can also consider negotiating with your lender to obtain a loan modification or repayment plan. Depending on your financial circumstances, you can get a repayment plan to address your outstanding balance and prevent foreclosure.
Another option, which is not ideal, is filing for bankruptcy, which will discharge your mortgage debt. You can also file a quiet title action to clear your property title from the mortgage, allowing you to establish your ownership free of the disputed mortgage. Ensure you monitor your credit report for any changes to your mortgage.
To prevent this dire scenario, homeowners must stay proactive about their mortgage status, especially when financial struggles arise. Regular communication with lenders and advisors is not just important, it’s crucial. It’s your responsibility to minimize the risk of these situations. Understanding your options and making the right decision can help you reclaim control of the situation. Whether through negotiation, legal action, or counseling, there are paths that open up that help resolve the zombie mortgage.
Written by Evan Williams June 8th, 2024