A new report on zombie foreclosures found that as of the end of January, 142,462 homes actively in the foreclosure process had been vacated by the homeowners before the bank repossessed the property, accounting for 25% of all active foreclosures.
The total number of zombie foreclosures fell 6% from a year ago, but the 25% share of total foreclosures represented by zombies was up from 21% a year ago."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," said Daren Blomquist vice president at RealtyTrac. "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."Despite a 35% decrease in zombie foreclosures compared to a year ago, Florida had the highest number of any state with 35,903 - down from 54,908 in the first quarter of 2014. Zombie foreclosures accounted for 26% of all foreclosures in Florida.Zombie foreclosures increased 109% from a year ago in New Jersey, and the state posted the second highest total of any state with 17,983 - 23% of all properties in foreclosure.New York zombie foreclosures increased 54% from a year ago to 16,777, the third highest state total and representing 19% of all residential properties in foreclosure.Illinois had 9,358 zombie foreclosures at the end of January, down 40% from a year ago but still the fourth highest state total, while California had 7,370 zombie foreclosures at the end of January, up 24% from a year ago and the fifth highest state total. Mark Hughes, chief operating officer at First Team Real Estate, covering the Southern California market, said: "We are now in the final cycle of the foreclosure crisis cleanup, in which we are witnessing a large final wave of walkaways. This has created an uptick in vacated or zombie foreclosures and the intrinsic neighborhood issues most of them create. A much longer recovery, a largely veiled underemployment issue and growing examples of faster bad debt forgiveness have most likely fueled this last wave of owners who have finally just walked away from their American dream.""In states with a bloated foreclosure process, added Blomquist, "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.Other states among the top 10 for most zombie foreclosures were Ohio (7,360), Indiana (5,217), Pennsylvania (4,937), Maryland (3,363) and North Carolina (3,177)."Rising home prices in Ohio are motivating lending servicers to commence foreclosure actions more quickly and with fewer workout options offered to delinquent homeowners, creating immediate vacancies earlier in the foreclosure process," said Michael Mahon, executive vice president at HER Realtors, covering the Ohio housing markets of Cincinnati, Columbus and Dayton. "Delinquent homeowners need to understand how prices have increased in recent months, and how this increase in equity may provide positive options for them to avoid foreclosure." The greater New York metro area had by far the highest number of zombie foreclosures of any metropolitan statistical area nationwide, with 19,177 - 17% of all properties in foreclosure and up 73% from a year ago.Zombie foreclosures decreased from a year ago in Miami, Chicago and Tampa, but the three metros still posted the second, third and fourth highest number of zombie foreclosures among metro areas nationwide: Miami had 9,580 zombie foreclosures,19% of all foreclosures but down 34% from a year ago; Chicago had 8,384 zombie foreclosures, 21% of all foreclosures but down 35% from a year ago; and Tampa had 7,838 zombie foreclosures, 34% of all foreclosures but down 25% from a year ago.Zombie foreclosures increased 53% from a year ago in the Philadelphia metro area, giving it the fifth highest number of any metro nationwide in the first quarter of 2015. There were 7,554 zombie foreclosures in the Philadelphia metro area as of the end of January, 27% of all foreclosures.