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‘Zombie Foreclosures’ Are Dwindling But Not Dead

Posted on in Mortgage Foreclosure

‘Zombie Foreclosures’ Are Dwindling But Not DeadDuring the Great Recession, so-called “zombie homes” were a common problem for mortgage lenders. Zombie foreclosure is a way of describing a situation where a home is abandoned after the occupants received a foreclosure notice. The number of zombie foreclosures has decreased since the height of the housing market crash. A recent report on foreclosures during the fourth quarter of 2019 found that 3.1 percent were zombie foreclosures, which is down 5.8 percent from the first quarter of 2014. Illinois had the fourth-most zombie foreclosures in the U.S. with 943, which is 4.7 percent of its foreclosures. Abandoned homes are still a problem that can decrease the resale value of the property.

How Zombie Foreclosure Occurs and Why It Is a Problem

When a homeowner receives their initial foreclosure notice, they may decide to abandon the property instead of contesting the foreclosure process. They may believe that they have no hope of paying back the mortgage and that they are better off leaving before the foreclosure is completed. This causes a major problem for mortgage lenders because an unoccupied property will fall into disrepair. In some cases, the previous occupants may have left the home in bad shape.

A zombie home will decrease in value, even if the lender works to maintain its appearance. The lender cannot sell the home until the foreclosure is finished because it is still in the previous occupant’s name. A zombie home will also decrease the property values of other homes in the neighborhood, some of which the lender may be trying to sell.

Preventing a Zombie Foreclosure

You can discourage the homeowner from abandoning the property by educating them about the foreclosure process:

  • You cannot force them to leave the home unless you complete the foreclosure process.
  • Abandoning the home will damage their credit score and make it more difficult to purchase another home.
  • They are still liable for homeowner expenses such as property taxes after abandoning the home.

If the occupant has already abandoned the property, you can request to fast-track the foreclosure, which could save you more than a month on the time the foreclosure takes.

Contact a Chicago Creditor’s Rights Attorney

Foreclosing on a property is not a decision you should make lightly, given all of the complexities involved in the process and the risk of losing money on the property. An Illinois creditor’s rights lawyer with Walinski & Associates, P.C., can guide you through the foreclosure process, including when dealing with an abandoned home. To schedule a consultation, call 312-704-0771.

Source:

https://www.worldpropertyjournal.com/real-estate-news/united-states/detroit/real-estate-news-attom-data-solutions-q1-2020-vacant-property-and-zombie-foreclosure-report-zombie-homes-data-for-2020-home-foreclosure-data-11838.php

Illinois Creditors Bar Association Chicago Bar Association Illinois State Bar Association
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