Zombie Foreclosures – an Endless Nightmare

Are you still liable for the house you lost through foreclosure?

Are bills for water, sewer, HOA dues and property taxes accruing right now – in your name? Is the City preparing to sue you for letting the yard become overgrown and littered?

If yours was a zombie foreclosure, the answer is yes.

Zombie Foreclosures are one more reason why a short sale is the safest course of action for underwater San Diego homeowners who can no longer keep up with mortgage payments. A short sale the only option that is absolutely over when it’s over.

Here’s what happens in a Zombie foreclosure…

Homeowners who let their homes go into foreclosure often move out after the bank notifies them that the auction date has been set. They assume that on the date specified, ownership will have transferred from them to their lender. Unfortunately, that isn’t always the truth.

Banks do what they believe to be in their own financial best interests – without regard to how their actions will affect homeowners.

That’s why banks, in their quest to avoid costs, sometimes do not complete the foreclosure process. Instead, they postpone the auction date. That lets the bank off the hook for property taxes, city services, and homeowners’ association dues. It also absolves them of responsibility to maintain the house and grounds in keeping with neighborhood standards.

In the $25 billion settlement with the state attorneys general in 2012, the nation’s five largest mortgage lenders agreed to inform borrowers of any decision to forgo or delay a foreclosure. But they don’t always adhere to that promise, and homeowners don’t always read their mail.

And therein lies the nightmare.

Thousands of homeowners who believed that they no longer had any legal interest in their homes are now being presented with bills from cities, counties, and homeowner’s associations – where property taxes, water and sewer services, and dues have not been paid since the homeowner moved away. In some cases, where an abandoned home has been vandalized and/or the properties have been left to the forces of nature, cities are also looking to the homeowner of record to make repairs, clean up the yards, and bring the homes up to neighborhood standards.

It gets worse…

In other cases, the banks take title, then simply don’t do the paperwork correctly. So while the former homeowner believes they’ve been cleared of the debt through the foreclosure, the banks are still reporting to the credit bureaus, claiming thousands of dollars still due and owing. The result is that no matter how well that homeowner has taken care of bills since the foreclosure, their credit scores remain in the gutter.

A second problem rears its ugly head when former homeowners are hit with judgments against them for the 2nd and even 3rd liens against the property. Banks don’t have to take immediate action when they decide to collect, so it could be 2 or 3 years before that former homeowner realizes that his or her secondary liens were not wiped out by the foreclosure.

What’s the solution?

If your home has already been foreclosed upon, check with your county tax assessor’s office to see whether they still show you as owner. Also check with your homeowner’s association to verify that ownership has legally been transferred to the bank. If not, call us for further assistance to determine the outcome. We have access to software and data that is more up to date than the public data banks.

If you’re underwater and behind on payments right now, choose the only SAFE solution: List your San Diego or San Diego County home as a short sale.

The short sale process will absolutely transfer ownership from you to your buyer. In addition, none of your lien holders will be allowed to sue you for a deficiency. When it’s over – it will be over.

You won’t suddenly – 2 or 3 years down the road – find yourself facing Zombies.

You’ll be able to get on with your life, begin rebuilding your credit, and purchase a new home within 2 or 3 short years.

So if you’re behind, call us today. We’ve helped thousands of San Diego homeowners avoid foreclosure – and we’d like to help you too.

You can reach us by writing td@tomdunlap.com or by calling 619-929-1413.


Please note that the information provided on this San Diego short sale page is generic, academic information used for general information purposes and may not be construed as or relied upon as a promise for a specific outcome.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.

Is a Deed-in-lieu safer or better than allowing a foreclosure?

Is a deed-in-lieu better than a foreclosure?

In a word, no. So what’s the difference?

In terms of your credit, there is no difference between a deed-in-lieu and a foreclosure. A deed-in-lieu merely saves the lender from spending the time and money to go through the foreclosure process.

The only difference to you is that you’ll probably know a definite date when you need to be out of the house – and you’ll probably need to be out sooner. With a foreclosure, your move-out date could be delayed for up to a year.

Meanwhile, under today’s guidelines, a foreclosure or deed in lieu will probably require 7+ years of good credit before buying a next home.

In addition, under California law, if you have a second mortgage that was not a “purchase money mortgage” the lender can come back on you for a deficiency after either a foreclosure or a deed-in-lieu. The only way to avoid that risk is through the short sale of your home.

The strange thing is, even though it’s more convenient, cheaper, and less time-consuming for the bank, you might not even be allowed to sign a deed in lieu. In order to be considered, you’ll have to fill out an application. And if you have two loans, you’ll probably be denied unless the same investor (not the same servicing company) owns both notes.

So… Is a deed-in-lieu better than a foreclosure?

Our answer is: “Don’t even consider it.” There simply is no benefit to the homeowner.

What about the January 2013 announcement from Fannie Mae?

In 2013 Fannie Mae announced that they’ll allow on-time borrowers to wipe out their mortgage debt through a new “mortgage release” program. This program is simply the re-naming of the deed-in-lieu process. And while it may be of benefit to homeowners in other states, it’s not a benefit to California homeowners. Here’s why.

Every situation is different. If you’d like specific answers that relate to your situation, call 619-929-1413 or write td@tomdunlap.com. We’ll be happy to analyze situation and provide the answers you need before making a decision that will affect your future.


Please note that the information provided on this San Diego short sale page is generic, academic information used for general information purposes and may not be construed as or relied upon as a promise for a specific outcome.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.

Are the Banks Negligent, Indifferent, or Inefficient?

Whatever they are, their actions all too often spell financial loss for San Diego homeowners.

Here are 3 ways that loan servicers and asset managers are keeping some San Diego homeowners in distress.

1. Asset managers routinely delay their response to short sale requests.

Most San Diego home buyers want a “yes or no” answer within a few days of making an offer to purchase, but when they attempt to purchase a home in short sale status, they’re forced to wait. In fact, agents report waiting 6 months or even more just to get a yes or no.

The result: Many homeowners go into foreclosure while a ready, willing and able buyer stands ready to purchase.

The second result: Buyers withdraw their offers when their patience runs out. They made the offer because they wanted a home – so they move on and choose one that’s readily available. We can hardly blame them for that.

Those who are willing to wait for an extended period of time expect a bargain in return for their patience, and we can’t fault them for that, either.

This delay in responding to short sale requests causes many San Diego buyers’ agents to avoid showing short sales. It’s much easier to get an answer after a home becomes a bank-owned foreclosure.

Why do loan servicers delay response? Is it inefficiency, negligence, or indifference?

If banks wanted to protect their investors and help the real estate market rebound, they would make the short sale approval process as fast as possible. And they could. They could, but so far all they do is talk about it.

They could begin the property valuation process just as soon as they get the short sale request. They could also inject some common sense. After handling dozens of foreclosures and short sales in a given area, they should know market values. If homeowners knew the bank’s “bottom line” they wouldn’t waste time considering offers that were sure to be rejected.

* Should you short sale or shouldn’t you? Call 619-929-1413 or write td@tomdunlap.com to get advice from Tom Dunlap – San Diego’s top short sale specialist.

2. Banks routinely reject loan modifications that would prevent foreclosures and preserve neighborhood values.

While a few homeowners have been granted loan modifications, more have been refused. You’ll find no shortage of stories about homeowners who spent months submitting paperwork before being denied. Others have been granted trial modifications and faithfully made payments, then been denied.

And the guidelines are both unclear and conflicting. One representative tells the homeowner they must be in arrears to be considered – another tells them they must not be in arrears.

Many who “do not qualify” are wondering why. One woman I spoke with said “We’ve been managing not to get behind with our payments at $1,700 per month. But the bank says they’re denying our modification because we can’t afford $1,100 per month. Does this make sense?”

The result: Homes in foreclosure that could have been saved and neighborhood values dropping because of the presence of vacant homes.

Is it deliberate negligence, indifference, or inefficiency?

4. Banks that repossess San Diego homes simply don’t get them on the market in a timely fashion, and don’t maintain those homes while they stand vacant. And as we all know, vacant homes or poorly maintained homes bring down neighborhood values even as they erode the value of the house in question.

Is this because they simply have too many homes to deal with? Is it an intentional delay because they don’t want to flood the market with repossessed homes? Or is it because they have failed to develop efficient ways to streamline their processes?

Whatever the reason, entire neighborhoods have been damaged by the banks’ failure to act in a timely manner.

The good news for San Diego homeowners and short sale buyers is that we have developed systems and relationships with loan servicers that get our short sale requests pushed to the “front of the line.”

We can generally get an answer within 60 days or less, and because we know how to present our short sale requests and negotiate with the banks, that answer is usually “yes.” In fact, we have a track record of 98% success in closing our short sales.

No two short sale situations are exactly alike. When you want advice that applies to your specific situation, call 619-929-1413 or write td@tomdunlap.com to request a no-obligation consultation.

And if you already know you want to short sell your home in Carlsbad, Coronado, La Jolla, Rancho Bernardo, North County, Del Mar, Mission Hills, Kensington, Metro San Diego, or downtown San Diego, or if you’d like to purchase a short sale, get in touch.

We’ll be glad to explain the short sale process, tell you what you can expect as a buyer or as a seller, and show you why we get good results while so many who attempt short sales fail.

We look forward to talking with you… so get in touch and we’ll set a time to get together.


Please note that the information provided on this San Diego short sale page is generic, academic information used for general information purposes and may not be construed as or relied upon as a promise for a specific outcome.

This site provides information about real estate, law, income taxes and credit scores as relates to borrowers in distress, short sales and similar situations. The site is designed to help users safely cope with their own needs. Information is not the same as advice — the application of law or regulations to an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer, tax adviser or other specialist if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation. The models in photographs accompanying the testimonials on this website are used for illustrative purposes and are not a personal endorsement.