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Chicago area ranks high in zombie foreclosures

by Joe Zekas on 6/26/14

According to RealtyTrac, the Chicago metro area had 9,975 “zombie foreclosures” in Q2 2014, ranking it third in the nation.

The following is from a recent RealtyTrac news release:

RealtyTrac recently analyzed zombie foreclosures for Q2 2014 — properties that have started the foreclosure process but never been foreclosed and the homeowner has vacated the property —one of the lingering legacies of the recent housing crisis.

Zombie foreclosures are a byproduct of lengthy foreclosure timelines and changing state foreclosure statutes. Many of these properties are likely to be the eyesores of a given neighborhood, driving down the values of surrounding homes and eroding local government tax revenue.

Distressed homeowners, who have vacated the property, may not realize they are still responsible for and owe property taxes on the zombie foreclosure — and that means unpaid property tax revenue for the local government taxing entity. RealtyTrac estimates that more than $400 million in property tax revenue nationwide is likely delinquent because of these zombie foreclosures.

States with zombie foreclosures that had been in foreclosure for the longest average time were New York (418 days), Florida (411 days), New Jersey (378 days), Illinois (272 days), and Hawaii (249 days).

Some states such as Florida and Illinois have passed foreclosure “fast track” legislation designed to help move these abandoned foreclosures through the system more quickly. New York is considering legislation now to address vacant properties, including making lenders responsible for upkeep of zombie foreclosures before they complete the lengthy foreclosure process. Local governments are working to leverage land banks to soak up the zombie foreclosures and either rehab them or demolish them. This is prominent in cities like Cleveland and Detroit, but also Cook County (Chicago) recently created a land bank.

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