First of all, I had never heard of a "zombie foreclosure" until I started researching.   I have found a vacant house in my parents neighborhood which I am very interested in purchasing as a home for myself.   Both as an investment, but more so, so I can keep an eye on my parents.  

Back in Sept, my dad and I walked the property and looked into the windows and the house is fully trashed.   (piles and piles of garbage).   I called the phone  # that were listed on the notifications and discovered it's a property "financed" by Wells Fargo.  

After researching the title (downtown) and researching the previous occupants, I discovered the residents died 6 years ago.  

I, researched and tracked down the "heirs" and they were unaware that the property was still just sitting, 6 years later.    After much conversation, 2 of the "kids" (grown adults...police officer and nurse) made a trip up to San Antonio and met me at the property.  Ironically the police officer was able to access the property.   

So "mom and dad" died, there was no will, met with an attorney and 6 years ago, house was "under water" and over $10K due in back loan amounts.    Kids told WF to foreclose.   WF started process but never finished foreclosure.    

So forward to today, house is still sitting vacant, full of trash and becoming more and more delipidated each year.   

I am a cash buyer, as it IS unfinanceable.  The kids have filed for "affidavits of heirship" so that the conversation can begin with WF.   

WF has said:   House is in the possession of the homeowner.   They do not maintain it.  (however they have been paying property taxes for the past 6 years).   They have not foreclosed on it, nor can they foreclose, as there was a bankruptcy that must be released first.  Articles of Administration were filed 5 years ago, and everything is pending, and deadlines have passed to complete process.   In Texas A of A must be completed in 4 years.    

There are currently 2 small liens on the property from the City of San Antonio for a vacant property and from the HOA.

So with all that said, WF has stated that the "contractual balance due" is $79K but (with fees and such, since there has NOT been a payment on the house) the "past due balance" is $141k.    

The county appraisal is $155K, but this house has no appliances, needs a new roof, needs painting, cleaning....all said and done, there is a $25K rehab to get this house livable.   

WF has NOT foreclosed on the property due to (a) a bankruptcy and (b) although they do not want to admit it, they "lost" the property.   

The heirs are trying to negotiate a "settlement", keeping in mind the house was purchased for $89K in 1998 and $130K of payments have been made (ie WF has not lost money on the deal).

According to my research and the local Rex Report, this house should sell at auction in the $70K range.   And that is a last resort option for the bank.

I have understood that a foreclosure, esp with a bankruptcy release is a $20K expense for a bank.  Plus I know there are costs incurred even to sell a house at auction.   

Does anyone have any advice in the negotiating process with WF PRIOR to them (a) filing for release of bankruptcy and (b) foreclosure.   I would think they would be willing TO negotiate and get this house off their bad asset list, rather than continue to lose money and invest in a whole bunch of legal fees in order to sell at auction.