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IRVINE, CA—While zombie foreclosures—homes actively in the foreclosure process that had been vacated by their owners—decreased nationwide 23% from a year ago, 16 states saw increases of zombie foreclosures prior to process completion in Q3, according to a report from RealtyTrac. A total of 117,298 zombie foreclosures were reported nationwide last quarter, representing 18% of all active foreclosures, and they will likely end up as short sales, foreclosure auction sales or bank-owned sales in the future, according to the firm.
The total number of zombie foreclosures reported in Q3 was down 17% from 141,406 in the second quarter, the firm reports. For a link to an infographic on this topic, click here.
According to Daren Blomquist, VP for RealtyTrac, “The most effective preventative vaccine for the blight caused by vacant, abandoned foreclosures has proven to be a short and efficient foreclosure process. Absent that, the best antidote for a zombie-foreclosure infestation is a proactive land-bank program like that in Cleveland—and more recently, Chicago—designed to aggressively take possession of vacant foreclosures and rehab or demolish them.”
Meanwhile, markets with lengthy and lengthening foreclosure timelines have unintentionally created a zombie-foreclosure breeding ground, Blomquist adds. “As we see a backlog of delayed distress finally hit the foreclosure pipeline in some of those markets, the problem is coming more to light.”
Blomquist tells GlobeSt.com, “Markets with increasing zombie foreclosures typically have a backlog of delayed distressed now just entering the foreclosure pipeline, some of them already vacated by the homeowner. These markets also often have at least pockets of neighborhoods where there has been population flight to the suburbs or other markets, and these neighborhoods are prime breeding grounds for zombie foreclosures. When a property in one of these neighborhoods falls into foreclosure, there is less chance a new buyer or investor will be interested in buying that property.”
As GlobeSt.com reported in June, the number of zombie foreclosures decreased 7% in Q2 from the first quarter of the year and decreased 16% from second-quarter 2013 to second-quarter 2014, according to RealtyTrac. The foreclosures are one of the lingering legacies of the recent housing crisis, a byproduct of lengthy foreclosure timelines and changing state foreclosure statues, but they are on a downward spiral.
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