They are foreclosed properties that are not yet repossessed by banks and put up for sale. Just like an apocalypse, zombie foreclosures are seen to rise at a local level.
In this scenario, the owner of the property has already been foreclosed but due to some circumstances the process has been cancelled. The sale is not held and the title does not pass on to the new owner, typically a bank. Therefore, the title remains in the homeowner's name.
In mid 2014, there were at least 141,000 zombie foreclosures according to RealtyTrac. This type of foreclosure hurts a lot of homeowners for the fact that they still hold the ownership of the property. Thus, they are still obliged to pay legal fees. The debts pile and pile until they haunt homeowners. The worst part is that homeowners are not aware that the foreclosure process wasn't able to complete.
Today, thanks to the rising prices of homes and foreclosure rules, zombie foreclosures are half of the number they were in the previous year. Compare to 141,000, they just account to over one percent of 1.5 million vacant homes in the United States according to RealtyTrac.
These properties are still seen largely in New Jersey (3,997), Florida (3,512), New York (3,365), Illinois (1,187) and Ohio (1,028). And some markets, such as Boston, St. Louis and Philadelphia, have an increasing zombie population.
The boost is likely to be caused by default notices with slow foreclosure process.
"The overall inventory of homes in the foreclosure process has dropped 36 percent over the past year so it's not too surprising to see a similarly dramatic drop in vacant zombie foreclosures," said Daren Blomquist, vice president at RealtyTrac.
He also added, "What is surprising is there are so many vacant homes where the homeowners do not appear to be in financial distress."
These vacant homes account to at least 63% according to RealtyTrac. And what's interesting is that these homes are owned outright and not on mortgage.
As Diana Olick said on CNBC, on the national level, the supply of these single-family homes for sale is tight. However, it is a sad note that a lot of single-family homes are vacant and off the market.
What do you think is the reason why zombie foreclosures still happen considering the fact that measures have been implemented and taken?
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