Over the last few years, new words have become part of our real estate vocabulary when discussing distressed properties. Terms such as 'shadow inventory', 'cure rate' and 'short sales' were introduced. Other words like 'underwater' and 'upside down' took on totally new meanings.
Today, we want to add two additional words that we will be hearing often over the next year or so: 'zombie foreclosures' and 'boomerang buyers'.
Bankforeclosuresales.com explains the term on their website:
“A zombie foreclosure or zombie home is a property that the homeowner has abandoned and assumed the home has become the property of the lender. Essentially what happens is the homeowner leaves the property after receiving a notice of sale from the lender, and then the home is left empty until the bank acquires the property. This acquisition can take longer than desired and during the period in which the home is not yet owned by the bank, technically the homeowner is still responsible for the property.
Sometimes the homeowner thought the property was foreclosed upon and therefore became the property of the bank. However, they occasionally find out (often years later and without notification) that the bank never took possession of the property and instead the homeowner (who thought they were no longer attached to the home) is notified that they are still responsible for the property legally.”
This situation is occurring in many markets right. The impact of the resolution of this situation is still to be determined.
In a article late last year, the Wall Street Journal coined the term 'boomerang buyer' to categorize a segment of the home buying population who have lost homes to foreclosure or short sales or have gone through a bankruptcy and are again eligible for a new mortgage. There are hundreds of thousands of buyers in this category currently in the market.
Both 'zombie foreclosures' and 'boomerang buyers' will be part of many real estate conversations moving forward.