Zombie foreclosures claw higher in 10 states

MarketWatch

Even as the U.S. housing market healed as a whole, zombie foreclosures clawed their way higher in 10 states over the past year, creating a swath of lingering eyesores and unresolved financial turmoil, according to data released Thursday.

Nationally, the number of zombie properties -- homes that have started, but not completed, the foreclosure process and have been vacated by the owners -- dropped to about 141,000 in the second quarter, down 16% from the year-earlier period, according to RealtyTrac, an online foreclosure marketplace. But 10 states saw zombie properties climb higher over the past year.

These aren't the trudging monsters that are lucky to stumble into a mouthful of brains. Rather, zombie foreclosures sprang up 58% over the past year in New Jersey, 56% in Delaware, and 21% in Maryland.

Most of the states with more zombies are those that have seen foreclosure activity rise over the past year. Now that the foreclosure deluge is waning, banks have turned their attention back to properties that have been sitting in limbo for some time.

Looking nationally, foreclosure activity has dropped as the housing market and prices rebounded over the past year. Also, some states have passed legislation to help speed up the foreclosure process for abandoned properties, and some local governments are using land banks to acquire troubled properties, and either fix them up or demolish them.

The problem with zombie foreclosure is that they can be eyesores, driving down neighborhoods property values. Also, they're a non-performing asset for banks. And governments are missing out of property tax revenue to the tune of more than $400 million, according to RealtyTrac.

"Zombie foreclosures are the most visible lingering negative effect of the Great Recession housing crisis," said Daren Blomquist, a vice president at RealtyTrac. "For the banks, these zombies represent another black eye from a public perception standpoint."

--Ruth Mantell

Follow the Capitol Report blog on Twitter @CapitolReport

Check out these Capitol Report links:

Obama becomes mocker-in-chief of climate deniers, and more must-reads Anti-Uber protest snarls D.C. traffic



More From MarketWatch

Rates

View Comments (31)