Zombie Foreclosure
Candlefocus EditorThe zombie foreclosure epidemic was brought on by the 2008 financial crisis, when millions of Americans were unable to keep up with mortgage payments and homeowners were either foreclosed on or were forced to walk away from their properties. Many homeowners who received foreclosure notices weren't aware of the foreclosure process, or that they were still responsible for the upkeep of the property until the foreclosure process was completed. As a result, they simply vacated their property, which left the area with several abandoned homes that weren’t being taken care of.
These zombie foreclosures have an incredibly detrimental effect on the housing market. An empty, abandoned home has negative implications for the entire neighborhood. It can cause property values to plummet, make otherwise desirable neighborhoods seem unsafe and uninviting, reducing opportunities for new property owners to purchase the home or rent it out again. Moreover, since the homeowner is still responsible for the upkeep of the property, they may be required to pay back taxes and other fees, along with any damage done to the property in their absence.
To help prevent zombie foreclosures, some cities and states have implemented “right-to-cure” laws, which require banks to give homeowners a chance to modify or reinstate their mortgages. These laws provide homeowners with a temporary protection that gives them time to explore their options and find a way to keep their home.
At the same time, many cities and states are also enacting plans to clear out zombie foreclosures in their area. These plans can include everything from demolishing the property entirely to offering financial incentives to buyers or landlords willing to purchase the home. Regardless of the strategy, the ultimate goal is to get the house occupied again and provide the area with a renewed sense of security.
Zombie foreclosures have been in decline since the 2008 financial crisis, but they’re still an issue that needs to be addressed in many places. In addition to helping out homeowners who are in danger of foreclosure, cities and states need to implement plans to clear out abandoned properties and get them inhabited again in order to protect their housing market.