What’s worse than having your home foreclosed on? Having it come back from the dead to haunt you after the foreclosure. Many previous home owners are learning that having their home foreclosed on may not be the end of their mortgage troubles. In some cases the foreclosure never even took place and they still own the home along with all of the responsibilities that accompany it.
In Colorado the lenders have up to 6 years after a foreclosure auction to pursue the deficiency and attempt to collect their losses from the borrower. Most of the time the lender does not recoup all of the money owed them on the note for the property and they have the right to collect. This is one reason it is in the homeowner’s best interest to work out a foreclosure alternative such as a short sale, so there are specific terms agreed upon by the borrower and lender. This is a much better option than walking away from the foreclosed property and looking over your shoulder wondering when and if the collector will show up.
Other properties are coming back to haunt their homeowners as a result of a foreclosure that never took place. In some cases the homeowner was told the property would be foreclosed on so they vacated the property, but the foreclosure never happened. Realty Trac estimates there are around 2 million properties on which the foreclosure process was started and never completed. These distressed homeowners are contacted months or years later to discover they owe money on HOA fees, water bills, and property taxes. Many times late fees, attorney fees, etc have been added on and accumulated to a bill in the thousands. Some of these homeowners filed a bankruptcy to avoid the financial obligation of the deficient mortgage debt and told by their bankruptcy attorney to just let the property go back to the bank in foreclosure. Later they find they have these new bills from the property because they are still the owners.
All of this makes it impossible for damaged credit to recover. Credit these days affects every aspect of our financial lives from interest rates to insurance rates. Zombie foreclosure that come back to haunt makes it difficult for a homeowner who lost their home to move on with their lives. There are many good options to avoid foreclosure. If you are a struggling Denver area homeowner feel free to contact me to learn what your options are to avoid foreclosure.