Foreclosures are scary in a lot of ways; for one thing, your home could haunt you as a zombie. Vampires also exist in the context of foreclosures. In a vampire foreclosure, the homeowner remains in the property after losing it to a foreclosure sale.
Often, after the homeowners lose their home through a foreclosure, they vacate the property. But sometimes the homeowners stay put. The term “vampire foreclosure,” also called “vampire REO,” refers to the situation where a bank has foreclosed the home, but the foreclosed owners still occupy the property.
This situation is different than a foreclosed homeowner who has the right to live in the property throughout a post-sale redemption period. In states that provide a statutory right of redemption, the redemption period typically lasts between a month and a year after the foreclosure sale.
Some states, usually those where the foreclosure process is normally nonjudicial, have a high percentage of vampire foreclosure properties.
One reason for the high number of vampire foreclosures after nonjudicial foreclosures is because this kind of foreclosure typically has a relatively short foreclosure timeline, and homeowners tend to have little time to find new accommodations.
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 this way, vampire foreclosures are a good thing: the home retains its value and doesn't attract squatters. On the other hand, zombie foreclosures 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 started, but for some reason, the foreclosure is never completed, leaving a vacancy. These properties often fall into disrepair with no one to perform regular maintenance and upkeep.
Also, homeowners who abandon their property might not even be aware that they're still responsible for property taxes, maintenance, HOA dues, and any other home-related expenses, which might leave them in an even more challenging 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.