IRVINE, CA—The number of zombieforeclosures—properties that have begun the foreclosureprocess but have never been foreclosed and the homeowner hasvacated the property—has decreased 7% from the first quarter of theyear and has decreased 16% from second-quarter 2013, according toRealtyTrac. The foreclosures are one of thelingering legacies of the recent housing crisis, a byproduct oflengthy foreclosure timelines and changing state foreclosurestatues, but they are on a downward spiral.

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One in every five foreclosures has been vacated by the homeownerbefore the foreclosure is completed, a total of 141,406 zombieforeclosures nationwide in Q2, totaling 21% of total properties inforeclosure, RealtyTrac reports. There were 24 states bucking thetrend with an increasing number of zombie foreclosures from theprevious quarter, plus DC, and 10 states plus DC saw an increasefrom a year ago, including New Jersey, New York and Maryland.

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States with the most zombie foreclosures include Florida, whichaccounted for more than one-third of all zombie foreclosures, NewYork, New Jersey, Illinois and Ohio. The states with the zombiesthat had been in foreclosure for the longest average time were NewYork, Florida, New Jersey, Illinois and Hawaii. Financialinstitutions listed as the beneficiary on the foreclosure documentswith the most zombie foreclosures were WellsFargo, Bank of America,Chase and US BankCorp.

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Daren Blomquist, VP with RealtyTrac, tellsGlobeSt.com, “What I found most interesting about our analysis thistime is that we looked at the potential impact of these zombieforeclosures on local property tax revenue. Our estimates foundthat these zombie properties nationwide represent more than $400million in potentially lost property tax revenue, much of thatlikely being unpaid. States with the most potentially lost propertytax revenue from zombie foreclosures are Florida ($113 million),New York ($102 million), New Jersey ($79 million), and Illinois($55 million).”

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Blomquist adds that what this means is that zombie foreclosuresreally represent a triple threat to local communities. “First, tothe homeowners abandoning these properties they represent aliability and responsibility the homeowner may not even be awareof; second, they are typically dragging down the home values ofsurrounding homes in the neighborhood; and third, they represent apotential loss of property tax revenue to local governments.”

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As GlobeSt.com reported earlier this week, USresidential properties, including single-familyhomes, condominiums and townhomes, sold at an estimated annual paceof nearly 5.2 million in May, a number that is virtually the sameas April and representing an increase of less than 1% from May2013, according to a report fromRealtyTrac. However, median home pricesincreased 6% in May as compared to April and rose 13% from May2013, representing the biggest annual increase since US home pricesbottomed out in March 2012.

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Carrie Rossenfeld

Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.