zombie foreclosures are still bank fraud
Zombie foreclosures have been a consistent theme in this blog for a long time. Most of my recent posts have focused on this topic because it comes in big bursts and it’s just too much to tweet. This does not mean that “zombie foreclosures” is the most important current zombie meme, it’s just the one that takes the most space to explain. I still regularly tweet LOTS of zombie references and if you are not following the @LawZombie twitter account then you are missing a lot of important zombie associations.
When RealtyTrac reports, all the news gets on the story with zombie quotes from Daren Blomquist pasted across local news. And note that this round comes with just a few days left in the New York Legislative calendar for the 2015 year (you didn’t realize the year was over already, did ya?). See WHEC: “New York State Exposed: Final week of legislative session for state lawmakers” by Jennifer Mobilia
The Abandoned Properties legislation (last year called the zombie kill bill), is still not passed. Of course, there are other important zombie-related issues that are still not addressed by the legislature either (drug law reform or nonhuman rights… anyone? – I guess we are leaving those issues to courts while yelling at the legislature about foreclosures? because? banks!!!).
And even if it’s true that abandoned homes are a sizable chunk of the foreclosure problem, this legislation would still do nothing to solve the majority of foreclosures: most of them are not abandoned. Many people are still being screwed by the bank crisis, back when we bailed out the banks and not the homeowners!!!
Remember, “Zombie Foreclosures are Bank Fraud” !!! It’s still true, perhaps now more than ever. And it’s really hard to tell which politicians are in bed with them.
Even the proposed New York legislation championed by AG Schneiderman is imperfect; sure it’s got teeth to fine banks but what does it do to protect homeowners? Special foreclosure proceeding? What about forced negotiations? Principal reductions and fair market loan modifications. Worse, the Governor seems content to make handshake ‘best practice’ deals with the bigger banks while ignoring there’s much bigger problem. So while we debate zombie homes, the real zombies are still struggling: recall there’s at least three kinds of zombie debt.
Benzinga: “Zombie Foreclosures: Is Apocalypse Getting Better Or Worse?” by Bill Stoller:
On June 11, RealtyTrac published an update: “Homeowner Vacated “Zombie” Foreclosures Down 10 Percent From A Year Ago in Q2 2015,” written by Jennifer Von Pohlmann.
According to RealtyTrac, “The total number of zombie foreclosures was down 11 percent from previous quarter and down 10 percent from Q2 2014.”
However, that statistic gives little solace to homeowners in neighborhoods with vacant homes still being pummeled by a slow-motion wave of foreclosures
And from CNBC: “Banks annihilating ‘zombie’ foreclosures” by Diana Olick:
“They’ve been able to stay in that home and maybe fight foreclosure for three, four, five years, and now finally the bank is coming back with all their ducks in a row, the proper documentation, and the homeowner is seeing the writing on the wall that I’m going to have to leave and move on with my life,” said RealtyTrac Vice President Daren Blomquist.
What? No!!!! They don’t have to leave until the foreclosure is done!! Not until the title officially changes! Where did the owners go?
Maybe the banks are actually back with their “ducks in a row”, or maybe they are just pushing shit. It might look like a duck and quack like a duck but if it doesn’t meet the formalities of mortgage securities law then it still might not be a duck. Are the banks trying to push debt that has been illegally robo-signed? Mortgages that weren’t signed by people with knowledge, were they robo-signed by zombies? Maybe some of these notes should dissolve as a matter of law? And without a full process of discovery and some serious creativity from foreclosure defense lawyers, how will we ever know?
MarketWatch: “Zombie foreclosures climb in L.A. area, other major cities” by Ruth Mantell:
The number of zombie foreclosures are rising in the Los Angeles area and other major cities
“The longer the foreclosure process drags on, the more likely the homeowner will end up leaving. In some of these cities you have underlying economic difficulty as well, which makes it more likely a homeowner will fall into a foreclosure in the first place, and that they may leave for greener pastures,” Blomquist said.
Where are these “greener pastures”? Why would they go there if they could continue living in the house for free? Some homeowners actually died, and some found work elsewhere, but then they are paying rent there? If the house is habitable wouldn’t it be cheaper to live there, even rent it, until the bank takes ownership? Where are the people who own these houses? Sure, some homes were destroyed by weather and insurance companies are to blame too (see last week’s 60 minutes segment “The Storm After the Storm” about insurance fraud for Sandy homes) But, my guess is there are lots of homeowners that want to negotiate with their bank but the banks are pretending they had no fault in the crisis. From the bank’s perspective the crisis was caused by defaulting homeowners who they want to treat like zombies instead of people who were hurt by the banking system itself.
AMNewYork: “Zombie Houses of NYC” by: Cristian Salazar:
When reached by phone later on, the owner, Garth Johnson, said the house was not in foreclosure and that he lived there. “I don’t know what you are talking about,” he said. “I realize you are definitely not talking to me. We have a piece of wood on the side of the house. I did not do the siding yet.”
“It’s not abandoned,” he continued, adding he had to go. “This is just a little difficult to deal with right now.”
there are potentially tens of thousands of homeowners facing the peril of losing their homes
a loan modification, saving his family from being out on the street
Where is the legislation to force loan modifications?! Why didn’t HAMP work for so many homeowners? Why aren’t states instituting more HAMP-like programs? Will $1000/day fines encourage negotiation? Well, they can’t hurt, but what rights will be given up in special foreclosures? I honestly don’t know. But the problem is not going away…
Gothamist “Report: NYC Is Facing A Zombie House Invasion ”
Assemblyman Dave McDonough (R,C,I-Merrick) today called on legislative leaders in the Assembly to address the growing problem of zombie properties
said the Legislature needs to act immediately before the problem escalates further.
“Parts of my district have some of the highest instances of zombie properties per one thousand compared to the rest of the state,” McDonough said.
Suffolk County has the fourth highest number of these homes in the nation, climbing from seventh place just three months ago. Nassau moved from ninth place to eighth place.
It’s not just impoverished neighborhoods, see WIVB4: “Zombie home” exists in neighborhood of trophy homes” Al Vaughters
And read this editorial from AMNewYork: “Get creative to provide homes and reduce zombie houses”
In New York‘s neighboring states:
NJdotcom: “N.J.’s ‘zombie foreclosure’ rate highest in U.S.” by Erin O’Neill:
The number of zombie foreclosures in New Jersey spiked by nearly 40 percent from a year ago
And in Philadelphia blaming the courts, BizJournal: Zombie foreclosures jump in Phila. market” Patricia Madej:
Pennsylvania’s judicial foreclosure process, which requires court involvement, takes an average of about 724 days, Bloomquist said.
“I think really where this falls – there’s responsibility on both sides,” he said. “The homeowners should be researching …. and banks would help if they were providing information in the foreclosure notice.”
In central Ohio…percentage is higher than the national average
“Big change in Zombie foreclosures in Dayton as housing market improves” by Olivia Barrow
The number of so-called ‘zombie foreclosures’ decreased 24 percent year over year in Dayton… This is a good sign for the Dayton housing market, because these so-called ‘zombie foreclosures’ tend to drag down nearby property values… Dayton’s decrease bucks the trend
ChicagoTribune: “ Fewer ‘zombie’ foreclosures affecting Chicago area ” by Mary Ellen Podmolik:
RealtyTrac defines a zombie foreclosure as a vacant home that is actively in the foreclosure process.
Maybe we should also question how RealtyTrac knows if the house is vacant. If I recall correctly they use postal change of address forms amongst other methods. That methodology seems somewhat flawed, but ok, who am I to question.
InMan: “Plague of ‘zombie’ foreclosures declines” Erik Pisor:
it’s in a foreclosing bank’s best interest to have a home occupied during the process.
Who am I to question that either? The banks really want us to believe it, so it must be true, right?
Meanwhile, in Florida, the news is pushing optimism this week, maybe because some judges down there are finally starting to get more involved(?), and because the market prices are improving so bargain-hunters are starting to buy them again.
MiamiHerald: “‘Zombie’ foreclosures fall in South Florida ” by Nicholas Nehamas:
so-called “zombie” foreclosures — fell 46 percent in South Florida over the last year.
PalmBeachPost: “Number of zombie foreclosures plunges” by Jeff Ostrowski:
The typical zombie foreclosure trades for a 22 percent discount to the average occupied foreclosure.
Boarded up and overgrown, “zombie foreclosures” are the bane of neighbors — but a boon to bargain hunters
See also in PalmBeachPost: “Zombie foreclosures are disappearing” Bill DiPaolo and Jeff Ostrowski
And in HeraldTribune: “Far fewer ‘zombie’ foreclosures in Florida” by Josh Salman:
“Prices have increased so much that, in many cases, the value of these homes are now at or near the mortgage debt associated with these properties,” said Jack McCabe, a Florida real estate consultant. “The banks were just sitting back and waiting, trying to keep their costs down until they could recoup full price.”
Tampa Bay Times: “Tampa Bay ‘zombie’ home problem easing” by Times Staff Writer:
Tampa Bay’s zombie apocalypse isn’t quite as scary as it once was.
“it is in a foreclosing bank’s best interest to have a home occupied during the foreclosure process and also demonstrates how these zombies are contributing to blight in neighborhoods across the country,” said Daren Blomquist, vice president of RealtyTrac.
The Tampa Bay Times just last month published “Beware the zombie (houses) still menacing Tampa Bay neighborhoods” by Susan Taylor Martin, already hinting at the optimism:
As cases are resolved, zombie houses return to the land of the living.
Vegas Inc: “‘Zombie’ foreclosures in the Las Vegas Valley are up 16 percent this year” by Eli Segall
Washington Business Journal: “Nobody’s home: 1 in 4 Washington-area foreclosures is vacant” by Jeff Clabaugh
Finally, a couple new ideas:
In Jacksonville: “Jacksonville City Council Passes Bill To Help Fight ‘Zombie’ Houses” by Lindsey Kilbride:
Legal Aid is partnering with the city to kill the zombies, so to speak.
Councilman Warren A. Jones is leading efforts to do something about not only zombie foreclosures
a bill the City Council passed this week could help. Bill 2015-340 would allow Legal Aid to better track and identify zombie properties.
And from Shelbyville News: “Programs available to help homeowners” …they are giving grants to homeowners for repairs!!! Now, that sounds like a smart idea, if only it forced some loan modifications too!