As Number of Zombie Foreclosures Increase, Housing Market Remains Strong

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Zombie foreclosures occur when a lender has started foreclosure proceedings, yet the borrower leaves the home before the foreclosure process has been finalized and a judge has issued an order for them to leave the property.

Soon after the housing crisis in 2008, the number of zombie foreclosures skyrocketed all across the country. Currently, the number of these types of foreclosures is up slightly, but experts in the industry still call them just a “blip on the radar.”

How Much Did Zombie Foreclosures Increase?

Currently, there are approximately 8,670 zombie foreclosures throughout the country. That means that of the 282,800 homes that are currently in foreclosure, the former owners have left 3.1 percent of them, resulting in a “zombie foreclosure.”

Those numbers are a slight increase of three percent from the last quarter of 2019, although they were down much more from the first quarter of 2014, when the total number of zombie foreclosures sat at 5.8 percent.

As for 2020, the number of total foreclosures is down 1.9 percent from the fourth quarter of 2019, although the number of zombie foreclosures has increased by 1.7 percent. This data shows that although the number of total foreclosures is dropping, the number of zombie foreclosures is increasing.

Even with the slight increase in zombie foreclosures, the news is good throughout the entire country. Since 2016, the number of homes entering foreclosure has dropped by 27 percent, and the total number of zombie foreclosures has fallen 53 percent.

Florida is one of the states that has struggled the most to rebound from the financial crisis. As such, it is not surprising to learn that the Sunshine State is the second-highest state for zombie foreclosures, with a total of 1,390 vacant foreclosures. The only state with a higher number of zombie foreclosures is New York, which has 2,206 vacant foreclosures. Falling behind New York and Florida are Ohio with 977 zombie foreclosures, Illinois with 943, and Pennsylvania with just 317 vacant foreclosures on the market.

Why Do Zombie Foreclosures Happen?

There are a couple of reasons zombie foreclosures happen. The first is that the homeowners receive notice that the lender is going to start foreclosure proceedings and, knowing that they have no way of pulling their mortgage out of default, they simply leave the property. This is usually because they think it will avoid a lot of hassle associated with the foreclosure process. Even more often, though, zombie foreclosures occur because the homeowner simply does not understand the foreclosure process.

When a lender wants to foreclose on a property, they must send the homeowner a notice stating that they are going to begin the foreclosure process. After the homeowner receives this notice, they have a certain amount of time to become current with their mortgage, or to come to a payment arrangement with the lender. If neither of these is an option and the homeowner cannot bring their mortgage out of default, the lender can continue to pursue the foreclosure, which involves filing a lawsuit and securing an order from the judge. It is only once that order is issued that homeowners must vacate the property. Until that point, the homeowner holds the title to the property.

Impacts of a Zombie Foreclosure

It is natural to think that a zombie foreclosure does not hurt anyone or that it does not have an impact. After all, the home is being foreclosed on anyway and, if the homeowners cannot afford to repay the mortgage, they will have to leave the home eventually in either case. However, there is much more to it than just that.

When a homeowner simply leaves the property after learning that the lender has started the foreclosure process, they are often not aware that they are still responsible for a number of things associated with the property. Even after foreclosure proceedings have started, homeowners are still expected to maintain the property until a judge issues an order awarding the lender the foreclosure. Delinquent homeowners are also expected to continue paying their Homeowners’ Association (HOA) fees and their property taxes.

Many borrowers do not worry about paying the property taxes because they believe the only consequence is that the state will place a lien on the sale. Eventually, after property taxes are not paid for some time, the state can then place the home in an auction known as a tax lien sale. However, this is not the only consequence of not paying property taxes. The state may attempt to garnish the borrower’s wages, levy their bank accounts, or garnish the borrower’s state tax refund.

Unfortunately, zombie foreclosures do not only hurt the homeowner that is in default on their mortgage. Vacated homes often fall into disrepair from the lack of maintenance. This can create safety concerns, and also negatively affect the outside appearance of the home. In the most extreme cases, squatters may move in or the home may become overrun with wild animals, such as rats or feral cats. When these things happen, it not only lowers the property value of the home but can also affect property values throughout the entire neighborhood. When there is more than just one zombie foreclosure in the neighborhood, it could even affect the property values of homes in surrounding communities.

Did You Receive a Foreclosure Notice? Call Our Florida Foreclosure Defense Lawyers

Zombie foreclosures only make a bad situation worse. If you have received a foreclosure notice from your lender, it is important to remember that you have options. At Loan Lawyers, our Fort Lauderdale foreclosure defense attorneys can advise you on the number of foreclosures available when you are facing foreclosure, and give you the best chance of staying in your home, or avoiding the negative consequences associated with a foreclosure. When you are about to lose your home, call us at (954) 523-HELP (4357) or contact us online to arrange a free consultation with one of our attorneys and to learn more about how we can help.

Loan Lawyers has helped over 5,000 South Florida homeowners and consumers with their debt problems, we have saved over 2,000 homes from foreclosure, eliminated more than $100,000,000 in mortgage principal and consumer debt, and have recovered over $10,000,000 on behalf of our clients due to bank, loan servicer, and debt collector violations. Contact us for a free consultation to see how we may be able to help you.