Vampire foreclosures vs. zombie homes in continuing housing recovery

  • 0

SARASOTA - Like the zombies in a horror film, the foreclosure crisis has proven tough to kill off. Now we even have "zombie homes" and "vampire foreclosures."

A vampire foreclosure is a home that has gone through foreclosure, but one from which the bank has not evicted the former owner, perhaps on purpose. “One of the reasons is they can see a home being maintained, not falling into a state of disrepair,” says David Hicks, a foreclosure attorney in Sarasota.

That's because the alternative is the zombie home, where the homeowner, facing foreclosure, simply abandons the home, leaving it as empty as a zombie's brain. But that we still have either of them demonstrates how the horror story called the foreclosure crisis has not ended.

“It's clear from the numbers and the people we speak to on a regular basis that there's a lot of people, in our state especially, that are still in trouble,” says Hicks.

Roughly 40% of people who carry mortgages owe more than the homes are worth. Three-hundred thousand homeowners who have stopped paying their mortgages have not even heard from their lenders yet. Never mind reports that foreclosures have declined in the wake of the state's new foreclosure law.

“Somebody would see that and they'd say, 'well, things must be getting better,'” Hicks says. “That's not the case at all. The banks and their attorneys still don't understand the new law, so they pull back on filings.”

Besides waiting to see how courts rule on the new law, Hicks says that the other thing that will get us out of the foreclosure crisis, which he still calls a "crisis," is when banks get more willing to modify people's loans. In some cases, that could be as simple as giving a better interest rate.