New York Zombie Foreclosures On the Rise
According to RealtyTrac, there were 16,700 zombie foreclosures in New York in 2014. That number has since risen by 54 percent. These homes are often the houses that bring a neighborhood's value down; the houses with unkempt lawns and boarded-up windows that are easy to ignore and forget.
New York is one of the top states for zombie foreclosures, along with Florida, New Jersey, and Illinois. This is because the foreclosure process takes a long time in these states compared to other states like Ohio, leaving homeowners to abandon their properties before the process is finished. In New York, the foreclosure process generally takes one to two years to complete.
What Is a Zombie Foreclosure?
Zombie foreclosures are sometimes known as zombie titles or zombie properties. A zombie foreclosure is a title that remains in a homeowner's name after he or she has moved out of the home without completing the foreclosure process. This can be because the foreclosure was canceled, the home's title was never officially transferred to its new owner, or the foreclosure sale was never held.
Before your home goes into foreclosure, contact an experienced real estate attorney to discuss your current situation and strategies to keep you in your home. Do not work with a debt management or counseling company until you have discussed your options with your attorney – these companies can often cost you more money than you can afford to spend without saving your home.
Avoiding Foreclosure and Staying in Your Home
If you are facing foreclosure, there are ways to protect your property and avoid having it become a zombie home. In 2014, New York lawmakers failed to pass the Abandoned Property Neighborhood Act, a law that would reverse the zombie foreclosure trend by informing homeowners of their right to stay in their homes until the court requires them to leave. This year, lawmakers are planning to reintroduce the bill.
The key to avoiding this scenario and staying in your home is contacting a foreclosure defense attorney as soon as possible to discuss your options and work out a viable strategy. Do not be ashamed of your situation – homeowners can fall behind on their mortgages for a variety of reasons such as job loss, illness, unfavorable adjustable rate mortgage terms, or an injury, just to name a few. Some of the debt relief strategies that might work for you include bankruptcy, a deed in lieu agreement, or a loan modification from your lender.
Deed in Lieu
By choosing to do a deed in lieu, you relinquish your deed to the bank in exchange for an agreement to cease the foreclosure process if it has already begun. If it has not yet begun, you may avoid starting the process through a deed in lieu.
Your lender might be willing to work with you to modify your loan. Your attorney can help you with this negotiation. You will need to provide your lender with documents attesting to your financial capability to continue to pay your newly-modified mortgage, such as a pay stub and proof of savings, as well as a letter documenting your financial hardship and need for the modification.
Chapter 7 or 13 Bankruptcy
Declaring bankruptcy is another way to stall the foreclosure process and get your finances to a healthier place to start paying back your debt. When you declare bankruptcy, the court issues an Order for Relief for you. This legal order requires your creditors to stop contacting you about your debts until the bankruptcy is finalized. This gives you some time to work with your attorney and the court to create a plan for rebuilding your finances.
Chapter 7 and Chapter 13 are the two types of bankruptcy available to individual consumers. Each has its positive and negative aspects and requires you to complete a unique process to eliminate your debt. Any individual with significant debt may file for Chapter 13 bankruptcy, but individuals who wish to file for Chapter 7 bankruptcy must pass the means test.
ABOUT THE AUTHOR: Robert S. Lewis
Robert S. Lewis brings over 27 years of experience to his legal practice. He assists clients with matters pertaining to bankruptcy, real estate law, estate planning and divorce.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.