A property is considered a “zombie property” when a mortgage servicer files for foreclosure and then does not complete the process. Often, the servicer walks away from a property after deciding the cost of proceeding with the foreclosure and maintaining the property until it can be sold will exceed the expected return.

The resulting uncertainty in ownership of the property can be extremely damaging for a community. The borrower may be unaware of the servicer's decision not to pursue the foreclosure and may decide to move out. This can lead to years of abandonment and unpaid fees and taxes on the property.

Not all zombie properties are vacant, however. Even when the borrower stays, because neither the borrower nor the servicer has clear control of the property, neither has a strong incentive to maintain it. These properties, therefore, are likely to be blighted and a source of instability for the surrounding properties.

The Woodstock Institute released a report recently identifying the magnitude of the zombie property problem in Cook County as well as patterns of where these properties are located, based on a random sample of 500 foreclosure filings that had not been resolved within three years.

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