The Great Recession and housing market crash brought with it unprecedented numbers in terms of foreclosures. Not only did the housing crash effect homeowners who really wanted to continue living in their homes, but it also had an impact on neighborhoods as homes now sit vacant.
Part of the issue with these now vacant homes, is not only are these homes susceptible to crime and property damage, but there are plenty of cases where the homeowner still technically owns the property and now owes back property taxes and other fees.
These types of homes have been labeled as “zombie” foreclosures. This is when a homeowner received notice of the foreclosure and moved out, only to find out years later that they still legally owned the home.
According to RealtyTrac, in the past three months there have been roughly 302,000 homes in the U.S. that fall under the category of “zombie” foreclosure. Indiana is one of the states with a high number of these types of properties.
In looking at how this even became a problem, one must look back to 2008 when the housing market crashed and banks were having a hard time re-selling properties. In order to save money on costs associated with foreclosures, the banks would just not officially foreclose on the home. While good for the banks, for the homeowners it has become disastrous. Not only is their credit score now affected by the foreclosure, but the unpaid property tax debt only further drives down their credit score.
For those in Indiana who are either facing foreclosure now, or who are living in fear of a foreclosure, as the “zombie” foreclosure issues goes to show, it is important to talk with an attorney when figuring out what next steps need to be taken. Maybe filing for bankruptcy is the best option in order to just avoid the foreclosure process altogether? Or, maybe getting rid of a second mortgage is the best choice? Either way, an attorney can walk through these scenarios with a struggling Indiana homeowner.