Return of Zombie Foreclosures
This past week RealtyTrac released another report on housing and foreclosures, so of course it’s time for zombie foreclosures – at RealtyTrac: “U.S. Foreclosure Activity Decreases 10 Percent in February From January Jump to Lowest Level in More Than 7 Years“:
Foreclosure Starts Drop to 8-Year Low But Auctions Still Up Annually in 19 States; Owner Vacated “Zombie” Properties Account for 21 Percent of All Active Foreclosures
and linking to another RealtyTrac article: “Zombie Foreclosures: The Vacant Dead” by Daren Blomquist:
With no one to maintain them, these zombie foreclosures are falling into disrepair, attracting vandalism and other crime and dragging down the values of nearby homes in the neighborhood.
Some zombie foreclosures can be cured if a new homeowner is interested in buying the property, often via short sale, and rehabbing.
Unfortunately the best solution for some zombies is a kill shot in the form of full demolition.
Reuters:”CFPB targets “zombie” foreclosures after Reuters report” by Michelle Conlin:
The Consumer Financial Protection Bureau is probing “zombie” foreclosures, a phenomenon first revealed by Reuters last year..
Zombie foreclosures result when banks begin a foreclosure -even going so far as to send the homeowners a foreclosure notice – but then abandon it, failing to alert the homeowners, who have often moved out, that they are still responsible for their vacant properties.
Borrowers, who don’t realize they still own their homes, are then left responsible for mortgage debt, taxes and upkeep.
Zombie foreclosures usually occur on low-value properties that weren’t worth the banks’ time to foreclose upon.
The CFPB said it had ideas to help resolve the problem such as creating a national definition of “abandonment”, hastening the foreclosure process so vacant homes can more quickly be transferred to potential owners and non-profits, and creating a national registry of zombie properties.
“Ormond group looks to clean up ‘zombie’ homes” By Chris Graham:
The first sign of these zombies may be an unmowed lawn. Later, evidence may include mosquito-infested pools, snakes and other vermin.
“Two years later, Lake Worth zombie foreclosure lives on” by Kim Miller:
The Palm Beach Post wrote about the home at 8072 Burlington Court, learning it had gone into foreclosure in September 2010. More than three years later, it’s still sitting there decaying.
Atlantic City, NJ: ” Abandoned foreclosures / Upkeep law needed “:
since banks don’t have title to the property – they cannot be required to maintain it under current law. That’s the genesis of a bill (A347) approved 72-2 last week by the state Assembly. The measure would make any creditor that has filed a notice of intention to foreclose – the first step in the process – responsible for any code violations at the property.
In New York,
Schumer continued, “I want to single out Mayor McCarthy and his team for their vision and determination on this project. Mayor McCarthy wasn’t willing to sit by and watch these zombie properties decay entire neighborhoods. So he proactively identified this HUD loan as a cornerstone of his plan to bring Schenectady’s neighborhoods back, just as they already have done with their downtown.”
New York State Attorney General Eric T. Schneiderman is proposing a bigger weapon designed to stop the spread of “zombie” houses. He recently announced plans for legislation that would require mortgage lenders to take responsibility, finally, for thousands of abandoned properties statewide. … The attorney general also wants to double the number of land banks statewide to 20.
But, Thinking it Through: “Uphill fight on ‘zombie’ properties” by Sara Foss:
All of that sounds good. But is it enough to get the banks to do what Schneiderman wants them to do?
In a recent article on Schneiderman’s effort to crackdown on “zombie” homes, the New York Times warned that the attorney general is facing a tough fight. “This will not be easy, in part because banks, homeowners and city officials often disagree on what constitutes abandonment,” the article notes.