Foreclosures are scary in a lot of ways. For one thing, your home could haunt you as a zombie. In addition to zombie foreclosures, there are vampire versions as well. In a vampire foreclosure, the homeowner remains in the home long after losing the home in a foreclosure sale.
Typically, after a homeowner loses a home through a foreclosure, he or she vacates the property. But sometimes the homeowner stays put. The term “vampire foreclosure” (also called “vampire REO”) refers to the situation where the home has been foreclosed by a bank, but is still occupied by the previous owner that was foreclosed on. (This situation is different than a foreclosed homeowner who has the right to live in the property throughout a post-sale redemption period under state law.)
In some states, where the foreclosure process is usually nonjudicial, there's a high percentage of vampire foreclosure properties. One reason for this might be due to the fact that nonjudicial foreclosure states have relatively short foreclosure timelines and homeowners tend to have little time to prepare to vacate the home. (Learn which states have long—and short—foreclosure timelines.)
To learn more about how many foreclosures and REOs are in your area, and how many might be vampires, you can go to RealtyTrac’s website to check the concentration of foreclosures by Zip code.
Vampire foreclosures can be difficult to spot in your neighborhood because the people living in the homes tend to maintain the property and keep the utilities turned on. In some ways, this is a good thing. Zombie foreclosures, on the other hand, often mean properties are susceptible to vandals and drag down surrounding property values.
A zombie foreclosure is where the homeowner moves out after foreclosure has been started, but for some reason the foreclosure is never completed. These properties often fall into disrepair with no one to perform regular maintenance and upkeep. In addition, the homeowner who abandoned the property might not even be aware that he or she is still responsible for property taxes, maintenance, HOA dues, and any other home-related expenses, which leaves him or her in an even tougher financial situation than before.
If you want to learn whether you get the right to live in a foreclosed property during a post-sale redemption period—or about your rights and responsibilities if you move out of your home before a foreclosure finishes—consider talking to an attorney.