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Illinois foreclosure: Some foreclosures may have been left undone

Some former homeowners in Illinois may discover that they are still the legal owner of the home their lender supposedly foreclosed. In a housing crisis that didn't need any other complications, a new rash of what are being termed as "zombie foreclosures" is cropping up. In these cases, the foreclosure was not properly completed by the lender in some manner.

For some homeowners, this means that they lender never properly took title to the property as it should have. The now former homeowner later discovers that he or she is still on the hook for costs such as property taxes and homeowners' association dues. It is believed that lenders sometimes delay taking title in order to avoid having to pay these expenses themselves.

Yet other homeowners may discover that their second mortgage lender never completed paperwork to forgive the debt even though the first mortgage lender foreclosed the property. Others find that they are still held liable for the difference between the amount of the mortgage and the amount the house sold for despite being told that debt would be forgiven. In these instances, the first time many homeowners hear about this is when a collection agency contacts them.

When a homeowner discovers that their foreclosure was not properly completed for whatever reason, it may be too late to recover financially. The damage that is done to that homeowner's credit may be irreparable. For some former homeowners in Illinois, this may be the straw that broke the proverbial camel's back financially. In those instances, filing for bankruptcy may be a way to erase past mistakes and begin with a fresh start.

Source: CNN, "Zombie foreclosures: Borrowers hit with debts that won't die," Les Christie, Feb. 20, 2013

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