By Mike Wallace, Bankruptcy Attorney, serving clients in all of East Texas, including Lufkin, Nacogdoches, Palestine, Jacksonville, Tyler and other surrounding communities

A problem that I have seen over the last few years in bankruptcies is a mortgage company dragging their feet in foreclosing on a surrendered property.

It usually plays out by a client contacting me that they are getting notices from the taxing entity for outstanding taxes, notices regarding uncut grass and/or bills from homeowner’s associations advising they owe dues.

The client is shocked when I advise them that they (the client) are responsible for the property until title has been transferred on the property. 

Title does not magically transfer to the mortgage company just because the property was surrendered to them in a bankruptcy.

A “Zombie foreclosure” occurs where the mortgage company refuses to move forward for any number of reasons on foreclosing on the property.

If there is no foreclosure, then the title remains in the name of the borrower/homeowner. 

The mortgage companies have refused to move forward on foreclosures because of several factors, including a surplus of properties on the market and the costs associated with taking possession of the property may exceed what the lender is willing to incur.

There are possible ways to deal with a zombie foreclosure that might keep a bankrupt client out of a difficult situation, so if you have any questions regarding zombie foreclosures or any other bankruptcy issue then give me a call at (903) 683-2018 or toll free at (800) 867-1583 and we can discuss your situation at no obligation to you.


As always, any opinions expressed on this website are just that, opinions. So if you have a question regarding bankruptcy or debt relief, then please give me a call to discuss your individual situation.  Bankruptcy, as many other areas of the law are very case or fact specific.  I pride myself on giving you the answers to your questions that are based on your individual circumstances.

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