CFPB ready to take on ‘zombies’

03/25/2014

CFPB ready to take on ‘zombies’

CFPB ready to take on ‘zombies’

WASHINGTON – March 18, 2014 – The Consumer Financial Protection Bureau (CFPB) is targeting “zombie” foreclosures, a growing problem in which borrowers may unknowingly still own a property that they thought they lost through foreclosure.

“Zombie” foreclosures are properties in which banks may have begun the foreclosure process on a home, contacted the homeowners about it, but then later abandoned the foreclosure process. The homeowners 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 own zombie homes but may not realize it, according to a Reuters analysis last year. These borrowers now may owe thousands of dollars in mortgage debt, as well as face code violations for abandoning the property.

The reason for the problem: Some banks walk away from foreclosure proceedings because the value of the property isn’t worth their time.

“The CFPB is beginning to look very closely at abandoned properties and zombie foreclosures,” said Laurie Maggiano, the agency’s servicing and secondary markets program manager, at a recent Federal Reserve Bank of Cleveland conference. “There is direct borrower harm if a borrower believes a foreclosure on their property has been conducted and they are no longer responsible. And months or years later, (they) find out that they are (the owner); that there was never a foreclosure, and they have large financial responsibilities that they never knew about.”

The CFPB says it has joined a task force to identify the “hundreds of thousands” of zombie foreclosures across the country. The CFPB also says that, among exploring other ways to resolve the issue, it would like to create a national registry of zombie properties.

Source: “CFPB Targets ‘Zombie’ Foreclosures After Reuters Report,” Reuters (March 13, 2014)

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