AMC’s hit horror series “The Walking Dead” may be based mostly in Georgia, but there are twice as many zombies lurking in Massachusetts — “zombie homes,” that is.
Like the fabled undead, zombie homes are caught between two worlds — vacated by owners who’ve received a notice of foreclosure, but not yet owned outright by the bank. “Between the time when the owners throw their hands up and leave and before the bank takes ownership, that’s when these zombie homes come about,” said Andrew Armata, chief executive of LAER Realty Partners.
Left vacant and often uncared for, zombie homes can resemble the living dead in other ways, too. With a shabby, decaying exterior and a sad, lifeless emptiness inside, they may have all the ragged curb appeal of a lurching corpse. “They’re kind of in this limbo where no one’s taking care of the home,” said Daren Blomquist, senior vice president of communications at ATTOM Data Solutions, which tracks foreclosure data and other property records. “You end up with a home that’s the eyesore of the neighborhood because nobody’s maintaining it.”
And like a bite from the living dead, a zombie house can infect others nearby. “They can contribute to blight in the neighborhood and can lower nearby property values,” Blomquist said. In fact, a 2013 report by the Center for Responsible Lending found that owners who live near a foreclosed property lose an average of $23,150 in home value; in predominantly minority communities, that figure is nearly double.
Vacant homes in foreclosure limbo can place other burdens on a community as well. They sometimes present public safety hazards as they fall into disrepair, and can even play host to illicit activity, Armata said.
“And a lot of these homes represent unpaid property taxes to the town or city, because no one’s taking responsibility for that either,” Blomquist said.
“It’s bad for all the parties involved,” Blomquist added. “Most people are going to blame it on the bank, whether that’s right or wrong. And the homeowner is in a tough situation as well. . . . A lot of times what we see is a homeowner gets the initial foreclosure notice and they leave the property at some point, and they don’t know that they’re still responsible for those unpaid taxes and upkeep.”
In the third quarter of 2016, there were 424 zombie homes across Massachusetts, according to ATTOM. That’s the 10th most in the nation, 3 percent more than last year, and a 20 percent uptick from the previous quarter. “When we look at the trajectory, it’s unfortunately getting worse in Massachusetts while it’s getting better nationwide,” Blomquist said. Nationally, the number of zombie homes has dropped 9 percent since last year; the only other state in the top 10 to see a year-over-year increase was New York.
Springfield and Worcester have the most zombie homes in the state, with more than 20 apiece. “They’re typically found in struggling communities where home values are stagnant,” Armata said, “but they’re also in areas where you might not expect them.” Indeed, communities as varied as Athol and Plymouth are in the double digits as well. And Roslindale and Dorchester, despite Boston’s hot real estate market, each hosts a pair.
While the increase in zombie homes in the state is counter to the national trend, Blomquist says it’s not surprising, because foreclosure activity in Massachusetts had risen year over year for 23 consecutive months before finally slowing in September. “More properties going into the foreclosure pipeline means there’s more fuel for the fire and more potential zombie houses,” he said.
So should we be bracing ourselves for the zombie foreclosure apocalypse? Not quite.
“When we look at the loan dates on these homes that are falling into foreclosure, most aren’t loans that were taken out recently,” Blomquist said. In fact, a disproportionate number of them are from the housing bubble and bust years.
“So this isn’t a new housing problem emerging; it’s just that Massachusetts has taken longer than many other states to deal with the bad loans that came about during the last housing downturn,” Blomquist said. Under normal circumstances, these properties would have been foreclosed upon years ago, he said, “but they’ve fallen into this foreclosure limbo.”
Another factor is the sheer length of the foreclosure process. In response to the widespread “robo-signing” fraud and illegal foreclosure practices uncovered at many large banks in 2010, some states, including Massachusetts, passed legislation aimed at protecting borrowers from unlawful foreclosures. “Attorneys working for the borrowers, they have a lot of ammunition now where they can come back and fight a foreclosure,” Blomquist said. “Believe it or not, banks have trouble coming up with evidence that they own the loan and have the right to foreclose. . . . It’s led to this very lengthy foreclosure process that has left the door open for zombie foreclosures.”
Thankfully, vanquishing zombie homes is less daunting than slaying actual zombies, though it’s still pretty complicated and messy. Some recent attempts to make the process more efficient, such as a new title-clearing law passed in 2015, appear to be helping (though these efforts are not without critics). The average time to foreclose on a home in Massachusetts is now 721 days; that’s about three months longer than the national average (629), but still down dramatically from the peak of 840 days in the second quarter of 2015. To put that in context, Blomquist said, the state average was 250 days in 2007, “so it’s almost tripled.’’
And if the housing market continues to strengthen, particularly in areas outside Boston that haven’t seen the same kind of price increases, the problem may abate naturally. A strong seller’s market encourages banks to move forward with the foreclosure process, Armata said, but it also alleviates some of the downward price pressure these properties can have on surrounding homes. “Most buyers are looking past the typical eyesore because there’s such a lack of inventory,” he said. “They’re focused on the property they’re buying, not the eyesore, knowing that in the near future that house will probably be sold and renovated or torn down.”
An abandoned zombie or bank-owned home may be a bargain for experienced investors and flippers, but it can present a lot of challenges, both legal and structural. “They’re not typically in a condition where a first-time buyer can acquire it and handle the renovation,” Armata said.
One lifeline for communities trying to rid themselves of zombies is the Abandoned Housing Initiative, which the Massachusetts attorney general’s office created to help communities combat the blight associated with vacant foreclosures. “We work with municipalities to compel delinquent owners to clean up their properties,” said Emalie Gainey, the office’s senior deputy press secretary. “In cases where they don’t, we have the ability to petition the court to appoint a receiver to rehabilitate the home.”
That court-appointed receiver is then tasked with bringing the abandoned property up to code, which can take anywhere from six to 18 months. If the owner of record refuses to pay for the work (which is often the case), a lien is placed on the property so the contractor can receive payment once the home is sold. The program is also funded through bank settlements from the aforementioned robo-signing fiasco.
Gainey says the initiative has worked in more than 100communities across the state, from Pittsfield to Weymouth, including recent rehab projects in New Bedford and Revere. “Once they’re rehabilitated, these properties can become a home for a family. Many are sold as affordable housing to first-time homeowners,” she said.
Meanwhile, new legislation in the works could provide additional zombie-fighting firepower. The state Senate passed a bill last summer that would allow communities to collect cash bonds from banks when they foreclose on a property. The bank would be expected to pay for the upkeep on the foreclosed property, but if it failed to do so, the bond would cover the maintenance. The bill has been sent to the House.
With any luck, by next Halloween, the only zombie houses in your neighborhood will be the ones decked out for trick-or-treaters.
TWO HOMES RENOVATED BY THE STATE’S ABANDONED HOUSING INITIATIVE
In Brockton: Before
In Clinton: Before