In response to the foreclosure crisis in 2008, a number of states enacted or considered enacting “fast track” foreclosure processes as a way to bring vacant properties to market quicker and ease neighborhood blight.
The National Community Stabilization Trust (NCST), a nonprofit organization focused on restoring vacant properties, attempted to review the efficacy of such laws but was unable to reach a conclusion. “Given the lack of empirical data, we cannot at this time reach a strong conclusion regarding either the advantages or disadvantages of expedited foreclosure processes,” NCST said in its report, titled “Fast Track Foreclosure Laws: Not a Silver Bullet for Fighting Blight.”
The nonprofit explained that there was insufficient data to truly examine “fast track” proceedings in various states “either because some states do not specifically track data on motion filings and foreclosure timelines or because this data is not publicly available.” Based on the available data and anecdotal evidence from interviews conducted in four states, the NCST concluded that even where “fast track” foreclosures were available, the option was rarely taken.
Under current law, many abandoned properties are subject to the same lengthy foreclosure process as occupied ones, resulting in extended vacancy and other considerable problems. However, mortgage servicers and the housing industry is moving towards addressing the problem of vacant residential property through a discussion on policies that can standardize procedures, definitions, and industry best practices for vacant and abandoned properties.
In a white paper on this issue, the National Mortgage Servicing Association (NMSA) had called for an industry-wide discussion on such policies and was in part developed with input from several NMSA member organizations including Wells Fargo, Bank of America, BankUnited, Selene Finance, and others.
“Vacant and abandoned properties is a complex and difficult issue that is detrimental to surrounding homeowners and communities,” said Ray Barbone, EVP, BankUnited EVP and Chairman of the National Mortgage Servicers Association (NMSA) upon the release of the white paper. “The issue is evidenced by recent legislation in Ohio and Maryland. However, the industry remains challenged in protecting those impacted due to inconsistent and disparate definitions and guidelines relative to such properties."
In its report, the NCST did offer a few recommendations for policymakers attempting to address the issues of vacant properties and urban blight. First, they believe that any statutes regarding expedited foreclosures should require the collection of data to determine efficacy and impact. The group also suggests policymakers “more effectively engage consumer, neighborhood, and housing advocacy groups in the legislative process.”