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Zombie foreclosures decline during COVID-19

The COVID-19 pandemic has not set off a wave of foreclosures, in large part because the government has put moratoriums on foreclosures and banks are offering mortgage forbearance options for homeowners who have lost their jobs.

“Zombie foreclosures”—homes that sit vacant—are actually down 3.1% from the first quarter of 2020, ATTOM Data Solutions reports. Further, the total count of properties in the process of foreclosure is currently down 8.8% compared to the first quarter.

The federal mandate preventing lenders from foreclosing on government-backed mortgages has also helped avoid a rise in foreclosures and zombie property numbers, but that rule is expected to end on June 30. That ban encompasses about 70% of home loans in the U.S.

“The foreclosure and zombie property picture hasn’t changed much in the second quarter of this year as most lenders are barred from taking action against homeowners who are falling behind on their mortgages,” says Todd Teta, chief product officer with ATTOM Data Solutions. “We are in a holding pattern across the country as long as the moratorium continues. At some point, that will have to be lifted, so that banks can make their own decisions about whether to continue delaying foreclosures while the economy recovers. When that will happen is unknown, but that’s the point when we see if foreclosure activity will remain at low levels or rise.”

Some of the states seeing the highest number of zombie foreclosures in the second quarter include Ohio (6.7%); New Mexico (5.5%); Indiana (4.8%); Illinois (4.7%); and Iowa (4.5%). By the actual highest number, New York has the most elevated zombie properties at 2,158, ATTOM Data Solutions reports. On a county level, zombie foreclosures are most prominent in Cuyahoga County (Cleveland; 12.8%); Broome County (Binghamton, N.Y.; 10.1%); Saint Clair County, Ill. (outside of St. Louis; 9.5%); and Onondaga County (Syracuse, N.Y.; 9.3%)

Meanwhile, the lowest rates for zombie foreclosures—all less than 1.3%—are in South Dakota, Idaho, New Hampshire, Utah, New Jersey, Connecticut, and Colorado.

Mike Wheatley

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at mike@realtybiznews.com.

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