Considering that the plague of the Great Recession is mostly over, a surprisingly high number of ‘zombie’ foreclosures remain out there – you know, the homes where the owner walked away due to their underwater mortgage, but where ownership has not yet been transferred to the lender?
Zombie homes are a problem mainly because they lead to blighted neighborhoods – not unlike the abandoned properties seen in the AMC television series, ‘The Walking Dead.’ Sometimes the owner is aware that the title has not yet been transferred – sometimes they are not. Either way, there are only two possible outcomes: The zombie is ‘cured’ or ‘killed.’
According to a report from RealtyTrac, there were 117,298 owner-vacated foreclosures nationwide in the third quarter – 18% of all properties in foreclosure.
While this is down 17% from the 141,406 zombies recorded in the second quarter and down 23% from 152,033 zombies in the third quarter of 2013, zombie foreclosures were up considerably in certain metropolitan areas. According to the report, one in five homes in foreclosure has been vacated by its owner.
As RealtyTrac points out, most of these vacant properties will likely end up as short sales, foreclosure auction sales or bank-owned sales in the future.
‘The most effective preventative vaccine for the blight caused by vacant, abandoned foreclosures has proven to be a short and efficient foreclosure process,’ says Daren Blomquist, vice president at RealtyTrac in a release. ‘Absent that, the best antidote for a zombie foreclosure infestation is a proactive land bank program like that in Cleveland and, more recently, Chicago, designed to aggressively take possession of vacant foreclosures and rehab or demolish them.
‘Meanwhile, markets with lengthy and lengthening foreclosure timelines have unintentionally created a zombie foreclosure breeding ground,’ Blomquist adds. ‘As we see a backlog of delayed distress finally hit the foreclosure pipeline in some of those markets, the problem is coming more to light.’
States that saw the biggest increases in zombies in the third quarter included New Jersey (up 75%), North Carolina (up 65%), Oklahoma (up 37%), New York (up 30%) and Alabama (up 29%).
Metropolitan areas that saw increase in zombies included Trenton, N.J. (up 106%); Atlantic City, N.J. (up 98%); Rochester, N.Y. (up 49%); Washington, D.C. (up 40%); New York (up 38%); and Philadelphia (up 21%).
The increases aside, Florida documented the most zombie foreclosures by far of any state, with 35,913. New York posted the second highest total (12,683), followed by New Jersey (12,133), Illinois (8,678) and Ohio (4,981).
The New York metro area saw the most owner-vacated foreclosures of any metro area nationwide, with 13,366, representing 12% of all properties in foreclosure, followed by Miami (9,869); Tampa, Fla. (7,509); Chicago (7,326); Philadelphia (5,405); and Orlando, Fla. (3,732).
To read the full report, click here.