Zombie foreclosures, or abandoned properties that are going through the foreclosure process, have had a dramatic decline in South Florida in the past year. According to RealtyTrac’s Zombie Foreclosure Alert, there has been a 46 percent decline in Zombie Foreclosure during the second quarter of litigation; which translates to about 7,021 properties. An attorney from Royal Palm Beach attributes this to higher knowledge of the law. Residents are aware that they are not required to leave the property until it is sold. This is a great benefit to both parties.
The average value of a property that remains occupied during the foreclosure process is $251,236. Once a property turns into a Zombie Foreclosure it loses about 22 percent of its value; knocking it down to $195,856. It is in the bank's best interest for a property to remain occupied during the foreclosure process. This is because zombie properties tend to have overgrown yards and incur fees for municipal code violations. Abandoned homes also tend to have mold issues which could become costly for the bank to amend. Empty homes tend to bring down the value of all homes around them. This eventually turns them into ghost neighborhoods, where every other property is deserted.
However, lenders are more inclined to offer loan modifications to keep borrowers in their homes. And, to rehabilitate former nonperforming loans as the economy improves. An attorney from Miami who represents lenders stated that they are getting increasingly more wary and tired of the litigation process. They prefer to extend the option of loan modifications to borrowers. Furthermore, they do this to avoid the year to two years wait for the foreclosure process to be complete.
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