When faced with foreclosure, abandoning the home is a poor solution.
If you are having financial problems and are unable to pay your mortgage, you may think that you are in a helpless position. Many in your situation think the same and decide to abandon their homes, thinking that their lenders will eventually sell them. Although this may seem like a sound tactic, in reality, it often leads to more financial distress, because the foreclosure process sometimes is not carried out to completion.
The problem of uncompleted foreclosures
When a homeowner decides to abandon his or her home when faced with foreclosure, it can lead to a particular problem called a "zombie" foreclosure. This phenomenon occurs when the foreclosure process is not completed on an abandoned home. The reasons why the home is not sold at a foreclosure sale are varied. Sometimes the lender believes that the home is not worth selling. In other cases, the lender does not have the necessary paperwork to complete the sale. Sometimes, the reason for the uncompleted sale is a mystery known only by the lender.
Regardless of the reason why the sale is not completed, an abandoned home in foreclosure can cause problems for the absentee homeowner. Since the sale did not happen, the title to the home is not passed to someone else. As a result, the homeowner remains liable for property taxes and other costs of homeownership (e.g. HOA dues and trash removal). Also, the abandoned property can be a magnet for vandals and squatters, which can lead to fines for zoning violations. Unfortunately, the homeowner is often unaware that these costs are accruing and is unable to pay them once they are discovered.
Zombie foreclosures are particularly a problem in New Jersey. Earlier this year, RealtyTrac reported that this type of foreclosure made up 23 percent of all foreclosures within the state. This represented a 109 percent increase from the prior year and was enough to give New Jersey the dubious honor of having the second highest number of such foreclosures in the nation.
When faced with foreclosure, get help
Because of the problems associated with zombie foreclosures, it is better not to abandon the home when faced with foreclosure. If your mortgage is unaffordable because of other debts, bankruptcy may be able to help. Chapter 13 in particular can be useful because it allows you stay in your home while giving you three to five years to become current on your mortgage. Additionally, most other debts are eliminated during the process.
On the other hand, if you do not want to keep your home, abandonment is still a poor option. There are other legal options that can transfer the title to your home out of your hands, relieving you of all future financial responsibilities.
To learn about your options, speak with an experienced bankruptcy attorney. An attorney can listen to your situation, and recommend a course of action that would best fit your unique circumstances.