Zombie foreclosures -- foreclosures in which homeowners move out of a property before a bank finishes taking it over, leaving the home vacant -- remain a problem across the country. And if you've left your home behind after receiving a foreclosure notice from your bank, a zombie foreclosure might be a big problem for you, too.
That's because you're still responsible for maintaining the home and paying property taxes on it even if you've left it vacant. And with foreclosures still taking a long time -- more than a year on average in some states -- you might rack up significant unpaid property taxes and a string of community complaints as your home sits empty while your bank slowly works through the forclosure process.
Daren Blomquist, vice president with online foreclosure company RealtyTrac, says that homeowners need to be proactive after receiving a foreclosure notice, even if they plan on quickly leaving their home behind.
"My number-one piece of advice to owners would be to not assume that the bank will actually foreclose on their property quickly," Blomquist said. "There are a lot of reasons why foreclosures take so long. And because foreclosures can take so long, we are seeing a lot of zombie foreclosures where homes sit vacant for months."
Blomquist says that 21 percent of all homes in foreclosure across the country are now zombie foreclosures.
Unexpected bills might await
Owners who leave these homes behind might receive an unpleasant surprise in the future: A big bill from their county for unpaid taxes. Too many owners don't realize that they are still responsible for paying property taxes even if they've stopped making their monthly mortgage payments, Blomquist said.
Others might be fined by their municipalities when the grass and weeds at their abandoned homes grow out of control.
For this reason, Blomquist recommends that homeowners after receiving foreclosure notices do everything they can to either sell their homes or make sure that their lender or bank actually takes over the property.
Owners can do this through a short sale, selling, with their lender's approval, their home for less than what they owe on their mortgage loan. They can also request a deed-in-lieu-of foreclosure from their bank. Under this arrangement, owners voluntarily give their home to their lender without having to go through the often-lengthy foreclosure process.
"You need to be proactive in disposing of the property," Blomquist said. "If you just walk away, property taxes and other bills could come back to haunt you. Your credit will keep degrading as your unpaid mortgage bills pile up. If you are proactive and move the house through a short sale or make sure the foreclosure actually closes, you will get black marks on your credit. But you will also have created a stopping point for your credit being degraded. You can then start rebuilding your credit."
In its most recent analysis of the trend, RealtyTrac found that the number of vacant -- or zombie -- foreclosures is declining across the country. But in the second quarter of this year, 21 percent of total properties in foreclosure -- or 141,406 properties -- were still zombie foreclosures.
The good news is that this number is down 7 percent from the first quarter of the year, when 152,033 zombie foreclosures dotted the country, and 16 percent from the second quarter of 2013, when the country had 167,680 zombie foreclosures.
The zombie foreclosure problem is worse in certain states: As of the second quarter of the year, Florida led the country with 48,630 zombie foreclosures. Other states with too many of these vacant foreclosures were New York with 12,666, New Jersey with 12,170 and Illinois with 11,925.
Part of the reason for zombie foreclosures? It takes too long for banks and lenders to actually foreclose on properties. RealtyTrac reports that zombie foreclosures in New York state were mired in the foreclosure process for an average of 418 days. In Florida, that figure stood at 411 days. In New Jersey it was at 378 days.
Blomquist says that homeowners who have equity in their homes - they don't owe more on their mortgage loans than what their residences are worth - should try to sell their homes after receiving a foreclosure notice. That's a better approach then abandoning the home, he said; by selling owners will at least receive some financial boost.
Those owners who are underwater - they owe more on their mortgage loans than what their homes are worth - can try to sell their homes through the short-sale process, Blomquist said. This can take a while, too. Banks have to approve whatever offer homeowners receive, something that can significantly slow the process.
Others might try the deed-in-lieu-of foreclosure approach, hoping that their lenders would rather take ownership of the home than go through the lengthy foreclosure process.
Unfortunately, these solutions might not work, and owners might simply have to wait out the long foreclosure process. In such cases, Blomquist says, it's important for owners to keep up with the maintenance of their homes and to pay their property taxes.
Those who don't? They might find that their zombie foreclosure will cause them financial pain in the future.