Unresolved Foreclosures: Patterns of Zombie Properties in Cook County
A new Woodstock Institute report examines the extent to which servicers are walking away from foreclosures in Cook County, Illinois, creating zombie properties, and how that practice may vary by the characteristics of the neighborhood in which the property is located.
The report defines a zombie property as a property for which a foreclosure case has been filed but not resolved for more than three years. Because neither the borrower nor the servicer has clear control of the property, neither has a strong incentive to assume responsibility for the property. Zombie properties, therefore, are likely to be poorly maintained or blighted, which threatens the stability of surrounding communities.
The goal of the report is to provide an estimate of the number of residential properties that are zombie properties and which types of neighborhoods are most likely to be at risk for the negative impacts that zombie properties can have on the community. The report found that:
- Almost 60 percent of foreclosures filed between 2008 and 2010 in Cook County were not sold at a foreclosure auction within the period between 2009 and 2012.
- Properties with foreclosure filings in high minority census tracts were more likely to be sold at auction than properties in low minority census tracts.
- Of all foreclosures filed between 2008 and 2010 in Cook County, approximately 8.7 percent (more than 11,700) are zombie properties.
- Zombie properties are disproportionately concentrated in lower-income communities.
- Zombie properties are more likely to occur in racially homogenous communities.
- Eleven Chicago community areas have 15 or more zombie properties per 1,000 properties eligible for conventional mortgages.
The report concludes with policy recommendations to reduce the negative impact of zombie properties on communities in Cook County, including:
- Mortgage servicers should notify borrowers, local governments, and courts when they decide to stop pursuing a foreclosure.
- Mortgage servicers should coordinate with local governments, nonprofits, and land banks to return zombie properties to productive use.
- Municipalities should enact vacant buildings ordinances that hold servicers and mortgagees accountable for maintaining homes, even before taking title to the home.
- Municipalities should seek creative ways to expand or leverage existing code enforcement resources.
- The Federal Housing Finance Agency (FHFA) should withdraw its lawsuit against the City of Chicago’s vacant buildings ordinance.
- The Cook County Land Bank Authority (CCLBA) needs a dedicated funding source.
- The National Monitor should more vigorously enforce the anti-blight provisions of the National Foreclosure Settlement.