DEFINITION of 'Zombie Title'

A right to ownership and possession of a home that remains with a person who believes he or she has lost the property as a result of foreclosure. A zombie title is a title to real property that happens when a lender initiates foreclosure proceedings by issuing a notice of foreclosure and then unexpectedly dismisses the foreclosure.

If the person is unaware of the foreclosure dismissal, he or she will be left holding a zombie title. A lender may decide to dismiss the foreclosure for a variety of reasons, including a surplus of inventory, if the costs associated with a foreclosure cannot justify its costs or if the lender does not want to take possession of the home.

BREAKING DOWN 'Zombie Title'

Lenders and banks are under no obligation to foreclose and take legal title to a property, even if the borrower has defaulted on the loan. A lender may choose to walk away, charging off the debt rather than taking title to the property.

Lenders are also not required to let a homeowner know if they have decided to dismiss the foreclosure. A homeowner may have moved out while unknowingly still holding title to the property, along with all of the associated costs and responsibilities of homeownership. Ownership does not change until someone else's name is on the title.

Zombie titles can lead to catastrophic financial troubles for homeowners who thought they had moved out and moved on. An unoccupied home, for example, can easily fall into disrepair. Not only does the homeowner remain liable for property taxes, but he or she can also be held liable by the local government for maintenance and repairs on the property.

If left unpaid, the homeowner could incur penalties and fees, and even face legal action. In addition, holders of zombie titles may have their wages and tax refunds garnished, and their credit destroyed, resulting in more financial trouble in the future. Homeowners can protect themselves against zombie titles by seeing the foreclosure process to completion, as well as making sure that the title legally transfers to someone else.

RELATED TERMS
  1. Zombie Foreclosure

    A situation (or a home in this situation) that occurs when a ...
  2. Foreclosure Action

    The legal proceedings initiated by a lender in the case of mortgage ...
  3. Foreclosure Filing

    The initial legal process of selling a mortgaged property that ...
  4. Voluntary Foreclosure

    A voluntary foreclosure is a foreclosure proceeding that is initiated ...
  5. Foreclosure Buyout

    A refinancing program that allows a homeowner to avoid foreclosure ...
  6. Judicial Foreclosure

    Foreclosure proceedings in which a mortgage lacks the power of ...
Related Articles
  1. Investing

    Don't Get Trapped in a Zombie Foreclosure

    Understand how foreclosures work and you can avoid the disastrous consequences of having a zombie foreclosure.
  2. Investing

    Helping Clients Navigate Short Sales And Foreclosures

    Both buyers and sellers can benefit from a real estate professional experienced in dealing with short sales and foreclosures.
  3. Investing

    Can You Dispute A Foreclosure?

    The bank has foreclosed on your mortgage, but do you really have to leave? Learn how to fend off the lenders and gain the time you need to save your home.
  4. Managing Wealth

    Investing In Foreclosures Not A Get-Rich-Quick Venture

    Investing in this kind of real estate takes capital, time and careful planning.
  5. Investing

    The 6 Phases Of A Foreclosure

    For many, foreclosure is still a real possibility. Make sure you're prepared and know the steps.
  6. Investing

    How To Delay Foreclosure

    While losing a home can be a traumatic event for you and your family, it's best to find ethical means of delaying or avoiding foreclosure, even if it takes more time.
  7. Investing

    Avoiding Foreclosure Scams

    If you want to save your home, avoid bogus offers and take matters into your own hands.
  8. Investing

    What Is A Short-Sale Property & How Does It Work?

    A short sale is an alternative to foreclosure whereby indebted owners get permission from a bank to sell their house for less than amount of the mortgage.
  9. Investing

    Saving Your Home From Foreclosure

    Learn the tactics you can use to prevent your home from being repossessed.
  10. Investing

    The Pitfalls Of Buying A Foreclosure House

    Find out if the house you're eyeing is really a good deal.
RELATED FAQS
  1. What is Foreclosure Investing?

    Foreclosure investing, despite the promises of late-night television infomercials, is not for the inexperienced. Read Answer >>
  2. How many mortgage payments can I miss before foreclosure?

    The status of your lender and the condition of your local housing market are some of the factors that determine how many ... Read Answer >>
Hot Definitions
  1. Trumponomics

    Trumponomics is a term for the economic policies of President-elect Donald Trump.
  2. Universal Health Care Coverage

    An organized healthcare system that provides healthcare benefits to all persons in a specified region. Many countries, such ...
  3. Davos World Economic Forum

    The annual meeting of the World Economic Forum hosted at Davos—a small ski town in Switzerland—in January each year is among ...
  4. Smart Home

    A convenient home setup where appliances and devices can be automatically controlled remotely from anywhere in the world ...
  5. Efficient Frontier

    A set of optimal portfolios that offers the highest expected return for a defined level of risk or the lowest risk for a ...
  6. Basis Point (BPS)

    A unit that is equal to 1/100th of 1%, and is used to denote the change in a financial instrument. The basis point is commonly ...
Trading Center