A new type of foreclosure is lurking across the U.S., raising fears in the housing market.
Nearly 50 percent of bank-owned homes across the country are now considered “vampire foreclosures,” according to RealtyTrac, because they are still lived in by the previous owner. In some cities such as Chicago, Los Angeles and Miami, up to 65 percent of homes seized by banks can be called vampire foreclosures.
The danger with these homes and so-called “zombie foreclosures,” where the homeowner has abandoned the property during the foreclosure process, is that they will eventually come on the market. It’s about 400,000 homes all together. The threat is that they will further slow the pace of recovery, especially for home prices and in markets heavily populated with these homes.
But, beyond the potential glut of less than worthy homes on the market, previous owners will also be left in the lurch. When the banks want to sell these properties to capitalize on improving home prices, banks will start the eviction process, forcing them out on the street.
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