A zombie apocalypse may not be around the corner, but zombie foreclosures are definitely plaguing the United States. A recent report by RealtyTrac, the property intelligence firm, found that zombie foreclosures increased in 16 states and 60 metropolitan areas across the country.
When a homeowner defaults on a mortgage, the bank schedules a foreclosure auction. Eventually, the homeowner moves out only to learn months or years later that a foreclosure auction was never really held and technically, the homeowner still owns the deeds and is liable to pay taxes on the house. This is a zombie foreclosure.
The RealtyTrac report found that 117,298 foreclosed homes were vacated by owners even before the foreclosure auction started in the third quarter of 2014 representing 18 percent of all the foreclosures.
This figure, though down 23 percent from a year ago and 14 percent from a quarter ago, has spread to more states and metro areas. Check out the metro areas where zombie foreclosures are on the rise:
Darren Blomquist, the vice president of RealtyTrac, explained that the decline in zombie foreclosures can be attributed to a better and more efficient foreclosure process, but the spreading infestation was due to lengthy foreclosure processes, especially in some markets.
"Zombie foreclosures become the most visible signs of the foreclosure problem, because neither the bank nor the homeowner is taking care of the property," Blomquist was quoted by the Richmond Times Dispatch.
"When you have a foreclosure process that takes three to four years, it opens the door to more vacated and abandoned properties," he added.
But this zombie foreclosure cloud too, has a silver lining.
"The good news is if they wanted to keep that home and fight to save it, there is a chance. They could go back and find some alternative to foreclosure," Blomquist was quoted by MarketWatch.
Foreclosure filings hit new lows for the month of September declining 9 percent from a month ago and 19 percent from a year ago. Lower the foreclosure activity, better the health of the housing economy. It shows that more people are able to pay off their mortgage and are above water. A recent CoreLogic report showed that more people regained positive equity in 2014.
