Thousands more Americans are losing their homes this year with 1.5 million properties taken by banks – up nine per cent on 2012
By Katie Davies
PUBLISHED: 10:27 EST, 31 March 2013 | UPDATED: 10:27 EST, 31 March 2013
The number of foreclosed or bank-seized homes has risen by nine per cent already this year – with 1.5 million properties currently being lost by homeowners who can no longer afford them.
A realty survey found the worrying increase over the last three months compared to the same time in 2012.
The research by California-based RealtyTrac says a further 10.9 million American homeowners are at risk because they owe more than their property is worth.
Of the 1.5 million properties currently in the seizure process more than 300,000 are stuck in limbo – not yet sold on but abandoned by cash-strapped owners.
Such situations occur when a bank notifies the owner of foreclosure but fails to go through with the sale – simply because they do not think its worth their while.
If they don’t sell the property banks get insurance and tax from documenting the loss which can often earn them more than the profit made on the house sale.
According to the Christian Science Monitor, it also means they can sell on debt to debt collectors.
The house then becomes a so-called ‘zombie property’. These properties tend to fall into disrepair because absent owners remain responsible for their upkeep but have moved on and don’t realize it.
They can attract vandalism and other criminal activity, further reducing property prices in the neighborhood.
Florida was the worst state for such deserted properties with 301,874 zombies.
Illinois and California were ranked second and third for zombies with Kentucky having the highest percentage of zombies per foreclosed properties.
More than half of their bank-seized homes were listed as empty and falling into ruin.
States deal with the growing problem in different ways – some fund the properties upkeep while others bill absent owners to varying effect.
‘These people have become like indentured serfs, with all of the responsibilities for the properties but none of the rights,’ former Cleveland-Marshall College of Law Professor Kermit Lind told the Monitor.
The record of foreclosures peaked in the midst of the financial crisis in December 2010 with 2.2 million homes seized by banks.
More than 60 per cent of the homes currently seized had loans worth less than $200,000 outstanding on them, with 30 per cent with loans between $200,000 and $400,000, according to the research.