Due to rising housing prices in the real estate market, zombie foreclosure are increasing in Los Angeles. It’s also happening in other major cities with low foreclosure rates, like Houston and Boston.
What is a zombie foreclosure?
Zombie foreclosures (sometimes referred to as “zombie properties” or “zombie titles”) happen when an owner believes their property will be foreclosed and sold at auction, leaves the property, and then the property doesn’t sell. When housing prices drop and the real estate market is poor (a “buyer’s market”), many banks and lenders don’t want to take over ownership of these abandoned homes, especially in areas with low property values. In these situations, the house’s title stays in the owner’s name, even if they’ve already moved out.
Zombie foreclosures are a problem for several reasons. For one thing, the owner and their family have to find a new dwelling while they technically still own their home. This can leave properties falling into disrepair and lowering their potential value and the property values of houses near them. The government also loses money because no one is paying taxes on these properties.
Now that the real estate market has turned around and property values are rising in most areas, there’s a new problem for financially troubled homeowners. Banks and lenders are speeding up the foreclosure process to regain ownership of properties and profit from the rising prices of a “seller’s market.”
According to foreclosure marketplace and data provider RealtyTrac, zombie foreclosure rates in the Los Angeles metro area increased by 39 percent over the last year. This gives banks and lenders more motivation to settle more foreclosure cases.
The attorneys at McFarlin LLP understand how hard you’ve worked to provide a nice home for you and your family. If you’ve faced foreclosure, you need to be represented by a legal team experienced in foreclosure law. Call our Irvine office today at (888) 728-0044 for a free consultation. We want to help you keep your home.