Tuesday, October 29, 2013

“Vampire” Foreclosures in October

It’s almost Halloween, and RealtyTrac has released a new report in which it coined the phrase “vampire” foreclosures, according to a recent article in CBS MoneyWatch.  What are vampire foreclosures?  Basically, it’s a term that describes properties that have gone into foreclosure and have actually been seized by the bank, but are still occupied by the original owners.  Did you know this was happening in Illinois and across the country?  It may sound unlikely, but RealtyTrac estimates that about 47 percent of bank-owned homes actually fall into the category of “vampire” foreclosures.  And in some of America’s larger cities, that percentage is even higher.  Chicago is actually one of those places, where “vampire” foreclosures account for about 65 percent of bank-owned homes in the city.
Real estate information companies continue to report on foreclosures in Illinois and throughout the country.  Sometimes these companies can discuss the foreclosure process and its aftermath in terms that aren’t especially clear.  Do you have questions about foreclosure or about how the real estate market is likely to affect you?  It’s never too early to contact an experienced Illinois real estate attorney.
Vampires, Zombies, and the American Housing Market Recovery
Earlier this year, we told you about “zombie” foreclosures.  What are zombies when it comes to the housing market?  Basically, zombie foreclosures are those where the homeowner abandoned the property during foreclosure—no one’s living in them, but they’re still homes, in a sense.  What’s the deal with the proliferation of “undead” language when it comes to describing foreclosures?
For many commentators, the foreclosure process involves a lot of properties that seem to be metaphorically between stages of life and death.  Most of these properties had been homes to families, and they still bear traces of that life.  In addition, many of these foreclosures are going to have to “come back to life,” so to speak, when they’re revitalized on the market.  According to Daren Blomquist, the vice president of RealtyTrac, the “zombies will eventually have to come to market,” as will the “vampires.”
Why do so many of these properties exist?  In many ways, the high number of distressed properties is misleading.  According to Blomquist, “this distressed inventory is artificially being held back so that in the short-term, it’s helping boost the home prices and the housing recovery in general.”  However, Blomquist explained that when these properties do return to the market, we might need to anticipate a drop in house prices and a delay in housing recovering.  After all, as Blomquist said, “these homes are going to have to hit the market.  They’re not going to just disappear.”
How Many Vampires and Zombies are Out There?
According to RealtyTrac’s numbers, there are about 250,000 “vampire” properties nationwide, and about 150,000 “zombies.”  Together, that’s about 400,000 houses that are “poised to hit the market,” a number that represents close to 10 percent of current home sales.
The number isn’t strikingly overwhelming, as Blomquist noted, but they could pose particular problems in “markets where there’s a high concentration of these homes.”  Do you have questions about foreclosures in the Chicago area?  It’s essential to have an experienced foreclosure defense lawyer on your side.  At the Emerson Law Firm, we have significant experience handling foreclosure issues across the state of Illinois and can speak to you today about your case.
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