Resurrection Zombie Loans and Other Mortgage Horror Stories

As a Foreclosure Defense Attorney, every day I help homeowners fight foreclosure and recognize first-hand the tactics and maneuvers banks and lenders pull on unsuspecting and trusting homeowners.

The average homeowner facing foreclosure, or in the middle of a foreclosure tend to think they have no rights, including the right to question the bank or lender, and tend to believe everything their lender tells them.

The lender plays the upper hand, and frankly, they do have that major advantage – they have a roomful of lawyers and a huge operation backing them. Many are considered to be a large factory mill – churning out foreclosure documents per their daily quota.

The homeowner is just a one person with limited knowledge of the law, and Colorado foreclosure law is complex and unique. Many of the Colorado foreclosure laws were put into place by that roomful of lawyers working for the banks and lenders. Colorado laws, enacted by the lenders’ lawyers and lobbyists, puts the homeowner in a disadvantaged position.

One could almost believe what many of these banks and lenders are telling homeowners, except there is a definite pattern of lies and deception coming from these lenders.

One couple, refinancing their home to a lower rate, never imagined their old loan, the loan Wells Fargo told them was paid off, would resurrect itself. They even received a “Confirmation of Loan Payoff” from the bank. Two years later, their credit was trashed, their son’s student loan revoked, and their house went into foreclosure. No one can explain where the two years of payments they faithfully made went to. No one can explain who received all those timely payments. I call this “Resurrection of the Zombie Loan”.

Time and again, the lender will work out a modification for the homeowner and set payments. The homeowner is relieved a foreclosure is averted. The homeowner, making new, lower payments is quite happy until a notice is tacked to their front door advising them of a court date to start foreclosure proceedings. Some never receive any foreclosure notice whatsoever and one day the sheriff appears at their doorstep with an eviction notice.

Homeowners often think they’ve negotiated new terms with the lender, then find their home is being put up for auction – or worse – and this is quite common – never received notice of the auction. One homeowner, promised by the bank their home would be placed on hold until further notice (while they worked out new terms) relaxed, thinking they’d have another six months or more to negotiate. They were in shock when they accidentally learned ‘further notice’ meant a couple of weeks.

Imagine going back to your home and finding locks on your doors forbidding you to get inside where all your belongings are. This homeowner had no notice. Locked out of the home for two days, without a change of clothing the homeowner was finally allowed back in on the third day, to find her home “ransacked”.

Short sales with ‘zombie’ second mortgages popping up after purchase, erroneous delinquent payment notices, improper foreclosure notifications, fees applied to paid-off mortgages, HOA horror stories, lost documents are just a few tactics homeowners have been blindsided by.

In many cases, it’s easier and more cost-effective for the lender to foreclose than go through a long process of short selling or modification.

We’re in the middle of the worst housing crisis since the Great Depression of the 1930’s. Lenders have established a dual-track approach toward homeowners – negotiating with them while trying to seize their home.

From January until mid-April this year, there were more than 575,000 new foreclosure filings in the U.S. The odds alone warrant mistakes.

The one thing each lender and bank have in common – they have a team of lawyers protecting their interests, and their interests alone. They often state on legal documents in small print, “you may or may not want to contact an attorney” – and they count on the homeowner not contacting one.

These institutions have lawyers protecting their interests, as a homeowner you should have an experienced foreclosure defense attorney who protects your interest as well.

If you are having problems with a foreclosure, possible foreclosure, home modification, mortgage fraud, short sale, eviction or any other real estate business, please contact Colorado foreclosure defense attorney Keith Gantenbein at (303) 617-2122 for a one-hour consultation. He will go over all your paperwork and documents, explain the legalities and consequences and give you clear options on the best way to proceed.

This article is not intended as legal advice. The opinions of this article are solely the opinion of the author.

About theglawfirm1

Gantenbein Law Firm is a Denver, Colorado Tax Law Firm, servicing all of Colorado. Gantenbein Law Firm also specializes in Colorado Real Estate Law, Colorado Foreclosure Defense, Wills & Trusts, and Business Law.
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