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Real Estate For Vampires And Zombies

Bergenhus

Vampire REOs and zombie foreclosures are the two most-graphic housing casualties of the foreclosure meltdown. Forms of real estate first identified by RealtyTrac Vice President Daren Blomquist, these strange properties are likely alive and very well in your community, indeed — they may be right down the block.

So what are they?

Essentially, vampire REOs and zombie foreclosures represent gaps in the foreclosure process, points where the system doesn’t work.

Vampire Real Estate


Vampire REOs are homes which have been foreclosed, sold at auction and are now owned by lenders. Although owned by a lender the real estate actually still occupied by the original owners and may actually look like any other nearby home, complete with a mowed lawn and bright lights at night.

Why does the lender permit the continued occupancy of the property without rent or mortgage payments? Basically, the lender figures that it’s better off with the owners in place because they keep away vandals and protect the property — at least until prices rise and it becomes possible to sell the property for enough to reduce losses on the loan and perhaps even break even.

Zombie Real Estate

With zombie foreclosures the occupancy picture is different. Here we have a property which has not been foreclosed but the owners have moved out. This is a bad situation for the lender because the home is unoccupied, no mortgage payments are being made and the lender does not have title. At some point the lender will foreclose or the property will be sold with a short sale.

The lender would likely prefer a short sale because with a foreclosure it would gain title and become responsible for maintenance, condo fees and taxes while a short sale would mean an end to its involvement with the property. For the moment, at least, the owners remain liable for taxes and such because on paper they stillĀ hold title.

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