Zombie Foreclosures Part II: 2 Years Later....25% of Foreclosures are Zombie Homes!

Two years ago we posted a blog on the implications of Zombie Foreclosures for homeowners.  Recent data shows that while the total number of zombie foreclosures are down, they represent a higher percentage of the foreclosure market.  What is a zombie foreclosure?  It is a home that was actively in a foreclosure proceeding but the bank did not complete the process thereby transferring ownership of the home back to the bank.  Often times homeowners have vacated the property under the belief the bank had extinguished their rights in the property.  What is the most common reason for this?  

"While the number of vacated zombie foreclosures was down 6% from a year ago, they represent an increasing share of all foreclosures because they tend to be the problem cases still stuck in the pipeline,'" states Daren Blomquist, the Vice President of Realty Trac - a national real estate information company and an online marketplace for foreclosed and defaulted properties in the United States.

  If you're a frequent follower of our blog, you know that our Michigan law firm consistently advocates for one thing:  debt resolution!  We encourage people to actively seek the best solution to end their debt struggles.  Since 2003 we have been helping Michigan families release the chains of debt and find lasting financial freedom through:

• Chapter 13 bankruptcy for debt consolidation;
• Chapter 7 bankruptcy for immediate debt elimination;
• Non-bankruptcy debt settlement options.

Call us today at 866-261-8282 for a free consultation with a licensed debt resolution attorney to discuss your options.  For your convenience, we offer 6 Michigan office locations in:  Detroit, Ann Arbor, Flint, Southfield, Warren and Dearborn.  

Potential Reasons that Zombie Foreclosures Might be on the Rise?

There is no known reason, but here are some factors that may be contributing:

• Continued underemployment that causes homeowners to walk away from their homes.

Although unemployment numbers have decreased in recent years, "underemployment" still remains an issue.  Underemployment can have a devastating effect on a family and their budget.  Since buying a home is the largest purchase most people will make, it stands to be the largest problem when incomes shrink.  If this describes you, we suggest a few courses of action:

• • Consider a lien strip to remove a second mortgage or home equity loan, as this will reduce your mortgage payment;
  • Investigate options to reduce or eliminate other unsecured debt (i.e. credit cards or medical bills) that may be taking away from your ability to concentrate your monthly income on things that matter the most - your home and vehicle(s).
  • Ensure judgments and/or wage garnishments don't sneak up on you and crash your budget by draining your bank account or taking 25% of your paycheck.
• Recent increases in home values have motivated lenders to pursue foreclosure actions more quickly and provide fewer workout options. Since home prices are generally on the rise, it benefits lenders to move more swiftly to end a relationship with a delinquent client through a foreclosure and unload the debt.  When home prices were in a freefall, lenders were more likely to delay the foreclosure process (in hopes that values may rise in the future) or were willing to work with homeowners on various workout or loan modification options.

Since home values are on the rise, you have increased options and more reasons to avoid foreclosure.

Avoid Foreclosure, Resolve Your Debt

As discussed in our previous blog piece, Zombie Foreclosures provide a unique set of issues and problems for homeowners.  Before it gets to that point, call to consult with one of our attorneys on your options to avoid foreclosure, reduce your debt and improve your credit. We are a Michigan based debt relief law firm with 6 convenient office locations in:  Ann Arbor, Flint, Detroit, Southfield, Warren and Dearborn.  Call us today at 866-261-8282 for a free consultation with a licensed attorney.  It may be your first step toward financial peace-of-mind and improved credit.