David P. Weber


Part I of this Article will briefly explain the context and scope of the problem, how it typically arises, and how the problem was exacerbated by the larger real estate crisis in the latter half of the 2000s. Zombie properties are problematic for the affected homeowners, but in many cases they are equally problematic for other individuals residing in the same neighborhood, the lenders and servicers, and the relevant municipalities who will have to face issues of negligence, blight and vandalism related to vacant properties. Part I will analyze current municipal approaches to dealing with the problem, primarily through vacant property registration ordinances (VPROs). In the search for a solution to this crisis, both lenders and borrowers will likely need to share in the financial responsibility for these properties. Part II will examine cases from both municipal driven litigation as well as consumer-driven litigation where zombie debt has been legally extinguished. Part II will also examine several bankruptcy decisions that potentially lead to an avenue of relief for the owners of the affected properties. Part III proposes two new unique ordinances that cities could use to combat the problem, highlights owner-based solutions in bankruptcy, and mentions other attempts that have been tried in erasing zombie mortgages. This article concludes that a compromise solution that involves the municipalities, lenders and borrowers is the best route to ease the nationwide problems associated with zombie mortgages.



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