Zombie Foreclosures - Is Apocalypse Getting Better Or Worse?

The damage to residential neighborhoods from the mortgage apocalypse appears to be contained in some cities, but still spreading in others. On June 11, RealtyTrac published an update: "Homeowner Vacated "Zombie" Foreclosures Down 10 Percent From A Year Ago in Q2 2015," written by Jennifer Von Pohlmann. According to RealtyTrac, "The total number of zombie foreclosures was down 11 percent from previous quarter and down 10 percent from Q2 2014." However, that statistic gives little solace to homeowners in neighborhoods with vacant homes still being pummeled by a slow-motion wave of foreclosures, often long after being abandoned by owners who were "upside down" or "under water" on their loans. Institutions With Largest Zombie Portfolios According to Von Pohlmann, financial institutions listed as the beneficiary on the foreclosure documents with the most zombie properties were:  Wells Fargo WFC - 16,171  Bank of America BAC - 9,543  US Bancorp USB - 8,278  JP Morgan Chase JPM - 7,519  Nationstar Mortgage NSM - 6,560 RealtyTrac methodology revealed "that 127,021 homes actively in the foreclosure process had been vacated by the homeowners prior to a completed foreclosure, representing 24 percent of all active foreclosures." The top five institutions are involved with 37.8 percent of these zombie foreclosures. Zombie Home Values According to RealtyTrac V.P. Daren Blomquist: "The average estimated market value of an owner-vacated foreclosure is 22 percent below the average estimated market value of an owner-occupied foreclosure, indicating that it is in a foreclosing bank's best interest to have a home occupied during the foreclosure process and also demonstrating how these zombies are contributing to blight in neighborhoods across the country." RealtyTrac noted, "The average market value of an owner-vacated zombie foreclosure in the second quarter was $195,856, 78 percent (or 22 percent below) the average market value of owner-occupied foreclosures ($251,236)." Areas Hardest Hit "Major [metros] where owner-vacated foreclosure values were furthest below owner-occupied foreclosure values were Detroit (25 percent), Seattle (18 percent), Houston (16 percent), Washington, D.C. (16 percent), Minneapolis-St. Paul (15 percent), and Columbus, Ohio (15 percent)." Markets Where Zombies Declined "Major markets where the number of zombies decreased from a year ago included Chicago (down 28 percent), Dallas (down 27 percent), Miami (down 46 percent), Atlanta (down 33 percent), and Phoenix (down 14 percent)." The Other Side Of The Coin In some states the foreclosure process can be a long and sometimes difficult process for lenders, but in some instances -- especially in highly desirable neighborhoods -- the institutions have gained the benefit of significant home value appreciation. While that sounds like a silver lining, there are still real estate taxes, maintenance, repairs and legal costs and commissions denting the bottom line prior to a short-sale, auction or REO sale. A Morbid Zombie Stat If being haunted by bad credit ratings isn't enough, here is another reason RealtyTrac pointed out why homeowners should avoid default, or stay in the home if possible: "6 percent of all owner-vacated zombie foreclosures involved a deceased homeowner, compared to 3 percent of all owner-occupied foreclosures with a deceased homeowner." This leads to an interesting question for the neighborhood watch: How many of the occupied foreclosures by a deceased homeowner are actually zombies?