Inquirer: Hilton Heights house turns out to be a 'zombie'

mowen@ledger-enquirer.comJanuary 19, 2014 

I always figured that should I encounter a zombie in Columbus, it wouldn't be in Hilton Heights. Bibb City, maybe, but not in the heart of lively and lovely Midtown.

It turns out that the Hilton Heights house we wrote about last week is actually what the real estate and legal communities are calling "zombie foreclosures." It's a term that refers to properties that go into the foreclosure process, but for some reason the process isn't completed.

The Meadowview Drive property is a perfect example of this phenomenon, said attorney Fife Whiteside, who is representing the owner of the property, Leslie McDaniel.

"This is a classic case," Whiteside said. "It fits the textbook definition of when the bank starts out to do a foreclosure and then for some reason they fail to finish it."

We need a little background here first.

McDaniel received the house as part of a divorce settlement several years ago. But she was unable to afford the mortgage and upkeep on the house, so she abandoned it to the bank, figuring it would foreclose, sell the property and settle the debt, Whiteside said.

That's what started to happen, but SunTrust Bank and/or its subsidiary SunTrust Mortgage somehow botched the foreclosure proceeding, Whiteside said, so the company that bought the house was unable to get a clear title. So it wanted its money back. But the bank wanted to keep the money, because that's what banks do.

Litigation ensued, as litigation is wont to do.

Along the way, Whiteside decided he would try something new. He filed Chapter 13 Bankruptcy for McDaniel, which he thought would mean he could sell the house, then settle her debts with the proceeds.

But the bank/mortgage company objected to the sale because they were still contending that the foreclosure was valid. And then the city of Columbus also objected, which puzzled Whiteside because, according to the original complaint filed in U.S. Bankruptcy Court, the city would get all the back property taxes owed on the house, which is about $9,000.

"The city gets three benefits from what we're trying to do here," Whiteside said. "They get their taxes paid immediately. Secondly, they get the property put back as a performing asset. In other words, the next owner will pay taxes. And they get the property cleaned up without having to go through the demolition process."

Actually, the city is not and was never opposed to the sale of the property, said City Attorney Clifton Fay. It was opposed to Whiteside's issuing subpoenas calling for Mayor Teresa Tomlinson and Tax Commissioner Lula Huff to be deposed in the case. The judge granted the city motion to quash those subpoenas. So as far as the city is concerned, the sale of the property can move forward, he said.

"We were never opposed to the sale," Fay said. "All we were doing is trying to protect city officials from abusive litigation tactics where they're subpoenaed about matters that aren't even in their jurisdiction."

A phone message left with an attorney for SunTrust was not returned Friday.

Whiteside said he hopes to have the legal matters and the sale of the property ironed out in the next 90 days. Then whatever happens to the house and property will be the responsibility of the new owner.

What will likely happen is the house will be demolished. Because it sat vacant for several years, it has suffered considerable water damage, Whiteside said. He expects the sale price to be a fraction of what it was in 2010 and for it to be a candidate for the wrecking ball.

"It is unfortunate that Ms. McDaniel was forced to go to the extreme of having to file bankruptcy in order to force the sale of the property and the level of opposition (particularly from the city) is perplexing," Whiteside said in a letter responding to last week's column.

So our Concerned Reader Helen and all the other concerned neighbors in the area can look forward to putting this zombie back in the ground where it belongs.

Seen something that needs attention? Contact me at mowen@ledger-enquirer.com or 706-571-8570.

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