Halloween may be over, but the U.S. is still dealing with a zombie problem – zombie foreclosures, that is. The most recent data from property intelligence firm RealtyTrac reveals that the percentage of these distressed properties increased in 16 states and 60 metropolitan areas in the third quarter.
So what is a zombie foreclosure? It is a property where a homeowner in default on his mortgage moves out before the bank actually takes possession of it. Zombie foreclosures are vacant properties with no one taking care of them, resulting in an increase in crime and property devaluation in the surrounding neighborhoods.
While the numbers have been declining overall nationally – there were 117,298 vacant U.S. foreclosed, but not yet auctioned homes in the 2014 third quarter, making up 18 percent of all foreclosures, down 14 percent from the second quarter and down 23 percent from a year ago – the rise in so many states recently is concerning.
Among the states that saw an increase in their zombie foreclosures were New Jersey where they jumped 70 percent from last year, North Caroline with 65 percent increase, Oklahoma with a 37 percent rise, New York with a 30 percent increase and Alabama with a 29 percent jump.
“The most effective preventative vaccine for the blight caused by vacant, abandoned foreclosures has proven to be a short and efficient foreclosure process,” said Daren Blomquist, vice president at RealtyTrac. “Meanwhile, markets with lengthy and lengthening foreclosure timelines have unintentionally created a zombie foreclosure breeding ground.As we see a backlog of delayed distress finally hit the foreclosure pipeline in some of those markets, the problem is coming more to light.”
There are plenty of states making good progress in whittling down their zombie foreclosure inventory. Missouri saw the biggest drop with a 73 percent decline. Virginia followed with a 59 percent yearly decrease, then California where they fell 56 percent, Massachusetts with a 46 percent drop and New Hampshire where the zombie foreclosure stock fell 45 percent.