Article Courtesy of The Herald-Tribune
By Josh Salman
Published September 11, 2014
Halloween is just around
the corner, and zombies continue to haunt houses in droves across
But these housing market spooks have little to do with trick of treat.
Zombies -- abandoned properties that have started the default process
but have not yet been repossessed by the bank -- have left a chilling
touch on the local economy.
Although the number of zombies has died off significantly this year, the
Sarasota-Bradenton area still has one of the largest inventories in the
nation, dragging on an otherwise robust housing recovery.
Even seven years after the Great Recession, zombies show some of the
nation's largest lenders still struggling to process their deliquent
homes, even when there is no homeowner left to put up a fight.
"There's been a concerted effort by the Florida courts to clear up the
foreclosures that have been in the system for two years or longer," said
Jack McCabe, a Florida real estate consultant. "But quite honestly, you
could make a pretty strong case we shouldn't even be in this foreclosure
situation at all anymore. It's just something we are going to have to
deal with for a while."
From the start of July through September, 1,198 zombie foreclosures were
in the Sarasota-Bradenton-North Port market, representing nearly
one-fourth of all properties in default, according to data released
Wednesday by industry researcher RealtyTrac Inc.
That tally was down 35 percent from the second quarter and 43 percent
below the totals from those same months one year ago.
But the region has one of the highest shares of these distressed homes
compared with the overall housing population in the county. In fact,
only 15 other metropolitan statistical areas have a higher raw number of
zombies in the U.S.
After reaching a post-recession peak last year, analysts predict zombies
are declining as lenders finally get a handle on new foreclosure
processing guidelines, while the backlogs in the courts thin out.
But as long as these property monsters linger, they are expected to
limit the supply of listings on the market and to batter property values
in neighborhoods where these abandoned homes often attract blight and
Value and tax revenue
A Herald-Tribune investigation during the summer showed banks had failed
to auction off or repossess $199.1 million worth of distressed real
estate assets in Manatee and Sarasota counties, ranging from derelict
duplex units in urban Bradenton to a $6.2 million Osprey mansion.
These delinquent homes are depriving local governments of an estimated
$2.89 million each year, based on each county's assessed values and 2013
tax rates, the newspaper's analysis revealed.
In the wake of the reporting, the city of Sarasota has considered
several controls to hold banks responsible for hundreds of zombie
foreclosures in the city, including a program that would force
homeowners in default to register with the city and pay penalties for
"These properties are racking up code-enforcement liens, and it's hard
for municipalities to collect them," said Matt Weidner, an local
foreclosure attorney. "It's physically costing taxpayers millions of
dollars that they're not getting compensated for."
The problem also is being felt across the state and nation.
Florida has an estimated 35,913 of these zombie foreclosures -- nearly
one-third of the nation's total and more than any other state, a
byproduct of the lengthy judicial process to settle foreclosure lawsuits
There were 117,298 of these owner-vacated foreclosures nationwide in the
third quarter, or 18 percent of total properties in foreclosure. That
was down 17 percent from the second quarter and down 23 percent from a
"The fact that the numbers are so disproportionately high in Sarasota is
still a real concern," RealtyTrac vice president Daren Blomquist said.
"These are the real problem properties," Blomquist said. "Even in the
world of foreclosures, these are the ones with the worst impact on the
market because nobody is taking responsibility for these homes and
they're left to rot in the heat and humidity of Florida."