National – Vigilance is Key in Addressing Abandoned Lots and “Zombie” Mortgages


Although statistical data shows the battle against zombie mortgages (A property becomes a zombie when a creditor initiates foreclosure and the homeowner vacates then home.  When the creditor fails to complete the foreclosure, title to the real property remains with the original homeowner, leaving the ownership “half dead” and “half living”) is being won nationwide, abandoned lots, vacant units and zombie properties continue to have negative impacts on communities throughout the United States (unkempt proprties, maintenance issues, rodents, unpaid assessments and lack of community spirit).

Through vigilance, community associations can effectively address conditions caused by these zombie properties.

In the December 2015 edition of Quorum Magazine, I outline a multi-prong approach that can be used to reduce the impact of zombie properties on neighbors and the Association.  Associations should:

  • Confirm ownership of the Lot;
  • Confirm the condition of the Lot violates the governing documents or properly-adopted rule and regulations;
  • Engage the locality (health department, code enforcement, zoning enforcement, fire marshal, etc.);
  • Engage in self-help if authorized by the governing documents and state statute; or,
  • Consider legal action in a court of appropriate jurisdiction.

I encourage you to read the full article for additional insight.  In addition to the options outlined above and in Quorum Magazine, associations should consider filing a complaint with the Consumer Financial Protection Bureau.

The Community Associations Institute now offers an online guide to filing a complaint with the CFPB.  According to CAI:

The Consumer Financial Protection Bureau (CFPB) has established rules to protect homeowners from costly surprises and dealing with unscrupulous mortgage servicers. These protections have been put into place to preserve the financial well-being of homeowners. The financial security of community associations is also an important component in preserving the financial well-being of homeowners…[and,] Any property that has a loan backed by Fannie Mae or Freddie Mac is required to provide timely service. Upon expiration of the breach letter, their servicers must expedite foreclosure proceedings to the greatest extent allowable under applicable law.

Through the CAI website, associations are provided a step-by-step guide to submitting a complaint with the CFPB.  The complaint process outlined by CAI makes it relatively simple for associations to submit complaints:

  1. The Association managing agent or Director must file a complaint through (you must enter your contact information and address information for the Lot).
  2. CFPB sends the complaint to the lender (or other company) for resolution.
  3. The lender communicates directly with the complainant and reports back to CFPB.
  4.  The complainant is updated through the online portal on CFPB’s website.

For those that use the complaint service, please keep me updated and e-mail CAI ( with the results.

Because every set of recorded governing documents are different, the application of the law to each community association differs.  The information provided above is for educational purposes only.  As always, contact an experienced attorney for advice and counsel.

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