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IRVINE, CA—The share of homes in foreclosure vacated by the owner prior to bank repo rose in January from 21% to 25%, but the total number of these zombie foreclosures decreased 6% from a year ago, according to a report from RealtyTrac. As of the end of January, 142,462 homes actively in the foreclosure process had been vacated by the homeowners prior to the bank repossessing the property, the firm reports.
According to Daren Blomquist, VP of RealtyTrac, “While the number of vacated zombie foreclosures is down from a year ago, they represent an increasing share of all foreclosures because they tend to be the problem cases still stuck in the pipeline. Additionally, the states where overall foreclosure activity has been increasing over the past year—counter to the national trend—tend to be states with a longer foreclosure process more susceptible to the zombie problem.”
Blomquist adds that in states with a bloated foreclosure process, the increase in zombie foreclosures is actually a good sign that banks and courts are finally moving forward with a resolution on these properties that may have been sitting in foreclosure limbo for years. “In many markets there is plenty of demand from buyers and investors to snatch up these distressed properties as soon as they become available to purchase.”
The report also reveals that Florida, New Jersey and New York have the most zombie foreclosures in the nation. Metros with the most zombie foreclosures included New York, Miami, Chicago, Tampa and Philadelphia.
“We are now in the final cycle of the foreclosure crisis cleanup, in which we are witnessing a large final wave of walkaways,” says Mark Hughes, COO at First Team Real Estate in Southern California. “This has created an uptick in vacated or 'zombie' foreclosures and the intrinsic neighborhood issues most of them create.”
As GlobeSt.com reported in October 2014, while zombie foreclosures decreased nationwide 23% from a year prior, 16 states saw increases of zombie foreclosures prior to process completion in Q3 2014, according to a report from RealtyTrac. A total of 117,298 zombie foreclosures were reported nationwide in the previous 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.
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