Zombie Foreclosures = When the owner of a foreclosed home leaves only to find out years later that he or she still legally owns the home and is on the hook for property taxes and other fees.
The Center for Public Integrity continues to do the kind of reporting that should serve a very big wake up call to all of America.
(While they just abandon homes)
The most important part of the conversation is the euphemisms that are used.
“The Investor” told us to foreclose. And then, “The Investor” told us to abandon the home.
Who exactly is “The Investor”? Who is making the decisions? And why? What economic, or other forces drive those decision-making processes? Is it in fact the dreaded, “moral hazard” of principal reduction? Are “The Investors” or “The Servicers” making rational business decisions? (It makes more sense to throw a poor elderly person on fixed income out into the street and then abandon that home than to give them a modification of mortgage.) Or are we seeing systemic or individualized incompetence? Clearly a little bit of both. Some homes are lost in the wave of foreclosures…but other homes…some with million dollar mortgages are just abandoned.
What are the other forces at play? Mortgage insurance? Federal guarantees? Black pools of residential backed securities or properties themselves?
The fact that we know so little after all these years is terribly disturbing, but at least we’ve got good reporters (finally) digging into these questions.
Zombie foreclosures have become more widespread in recent years throughout the country, but are especially prevalent in Florida, where as of June 2, 48,630 homes in some stage of foreclosure sat vacant, according to RealtyTrac, a company that tracks foreclosure filings nationwide. That accounts for a third of the 141,406 vacant foreclosed properties nationwide.
Daren Blomquist, vice President of RealtyTrac says zombie foreclosures come in two forms. The first is the unintentional byproduct of Florida’s judicial foreclosure process, which can take months and result in “properties sitting in limbo,” according to Blomquist.
The second involves an intentional delay by lenders, who file a foreclosure case so they don’t lose the option when the statute of limitations runs out, but don’t move it forward because completing the foreclosure would not be financially viable.
“This type of foreclosure is more common in Cleveland and the rust belt cities, for example, banks not wanting to foreclose because of low values and little demand for buyers,” said Blomquist.
But it’s not just rust belt cities that suffer.
About a mile from Young’s house is the brown rancher owned by Phyllis Mainor.
In 2005 and 2006, Mainor took custody of her two grandchildren from her daughter, who was a drug addict. She was living on a low income and the additional children, both of whom had severe asthma, made it impossible for her to keep up the home, which contained mold. She moved out and rented the house to another couple for a year. When they moved out, she was unable to find another tenant. CitiMortgage filed a foreclosure action in July 2009.