What Is a Zombie Foreclosure?
You get a call from a one of your past clients or maybe even a friend or relative. He (or she) has seen a house that’s vacant, and the caller wants to purchase this home. It’s the home of his dreams and he has to have it. But, it is vacant and he doesn’t know what to do.
As a professional real estate agent, you see a golden opportunity. Aaah. Here’s my next listing, you think. And, you already have the buyer ready to go. All you have to do is look up the property profile and contact the owner and poof… the listing is yours.
Unfortunately, as part and parcel of the recession, it’s not that easy. Distressed borrowers that have stopped making payments have abandoned many homes throughout the United States. Those very same borrowers believe that the bank will immediately foreclose on the property. Yet months elapse (or perhaps years), and the lender doesn’t complete the foreclosure process. The home is a zombie.
Meanwhile, the owner incorrectly assumes the bank is responsible for the property. Many owners do not realize that they are still on the hook. The home's title or ownership isn't at issue because even though the property is abandoned, if it is not foreclosed upon and is still the property of the borrower. According to an analysis by RealtyTrac, there may be as many as 300,000 zombie houses in the U.S. Using information compiled through the U.S. Postal Service vacancy and change-of-address records and foreclosure date, RealtyTrac was able to estimate that about 30 percent of the potential zombies are in Florida. Another 35 percent are in California, Illinois, New Jersey, New York, and Ohio combined.
Neighbors of zombie homes are concerned that zombie houses (with their deterioration and abandonment) can blight the neighborhood and can also have a domino effect, diminishing the appeal of an entire community. It’s possible that the homeowners do not realize the risk involved in abandoning their property. What happens if someone slips and falls? Or, what happens if children climb over the fence and hurt themselves when swimming in the abandoned pool?
The HAFA program offers a deed-in-lieu of foreclosure option, and distressed borrowers seeking to leave their homes and not wishing to participate in a short sale should explore this option before sending the home the way of the zombie. After all, it’s not Halloween quite yet!
Comments(6)