I wrote a piece for Realtor.com recently on the new issue of zombie titles and the way they're affecting distressed homeowners. It's just another chapter in the sad string of problems in the foreclosure process.
In short, a zombie title exists when a homeowner leaves their home before the foreclosure sale. A bank or other lender intends to foreclose on the home and schedules the auction/sheriff's sale, etc. The homeowners have already abandoned the property, but the bank, for reasons of legal issues, strategic decision making, or just plain ineptitude, never actually conducts the sale.
The homeowner thinks that the foreclosure is done and they can start rebuilding their credit. In reality, they still own the home, and are continuing to default on their loan. This can last for years. Meanwhile, the house is in disrepair, and can be inhabited by squatters or worse. HOAs and local municipalities start levying fines against the owner for not keeping the property up. This is usually when the zombie title owner actually becomes aware that the home is still in their name and the sale was never finished.
Read more here: Zombie Titles