ZOMBIE FORECLOSURE: WHAT IS IT AND HOW CAN IT BE FIXED

Written by Ryan Griffith, Esq.

Zombie foreclosures became a major issue after the mortgage crisis, and zombie foreclosures continue to plague neighborhoods today. This is evident by numerous law schools publishing journal articles on zombie foreclosure, UC Irvine School of Law,⁰¹ University of New Mexico School of Law,⁰² University of Washburn School of Law,⁰³ University of Emory School of Law,⁰⁴ Boston College School of Law,⁰⁵and Lincoln Memorial University School of Law,⁰⁶ to name a few. This article will explain the legal tools that California banks, cities, counties, and homeowners can use for zombie foreclosures and to improve neighborhoods throughout California.

Even though zombie foreclosures are a common occurrence, most people are unaware of what they are, yet alone how to deal with them. A zombie foreclosure starts as a normal foreclosure, when a bank issues a notice of default to a homeowner for missing mortgage payments.⁰⁷ What differentiates a zombie foreclosure from a normal foreclosure is that a property can remain vested in the original owner for years, while a bank in a normal foreclosure takes the title shortly after the bank issues the notice of default.

Often the owner of a zombie foreclosure believes the bank foreclosed and owns the property, but that is not the case.⁰⁸ In zombie foreclosure cases, the owner is left on the hook for the property taxes, property insurance, and other property maintenance responsibilities, which the owner usually cannot afford. The property then falls into disrepair and the owner commonly abandons the property assuming the bank will or has already taken it over.⁰⁹ Once the property is left vacant, it is often overrun by squatters that engage in drug use and/or other criminal activity. Furthermore, the water, electricity, and other services are shut off at the property. The squatters then live en masse at a property without running water, power, and other necessities. The people living in these unsanitary conditions then endanger the surrounding community. The squatters also often have hoarding and other mental health conditions that further blight the surrounding neighborhood.