The Consumer Financial Protection Bureau is targeting “zombie” foreclosures, a growing problem where borrowers may unknowingly still own a property that they thought the bank had foreclosed upon.
“Zombie” foreclosures are properties in which banks may have begun the foreclosure process on a home, contacted the home owners about it, but then later abandoned the foreclosure process. The home owners may have already moved out, at which point the property sits vacant with no one claiming responsibility for the upkeep, mortgage, or taxes.
Thousands of borrowers nationwide are owners of zombie homes, but may not realize it, according to a Reuters analysis last year. What’s more, borrowers now may owe thousands of dollars in mortgage debt, as well as face code violations for abandoning the property. Some banks are walking away from foreclosure proceedings because the value of the property is not worth their time, Reuters reports.
“The CFPB is beginning to look very closely at abandoned properties and zombie foreclosures,” Laurie Maggiano, the agency’s servicing and secondary markets program manager, said at a recent Federal Reserve Bank of Cleveland conference.
“There is direct borrower harm if a borrower believes a foreclosure on their …read more