Following New York’s lead [1], New Jersey wants federal legislation that takes aim at “zombie” homes—vacant and abandoned properties—that plague the state’s communities and drive down property values.
With 4,000-plus zombie property foreclosures in 2015, New Jersey was the state with the most such filings last year. U.S. Senator Bob Menendez [2] (D-New Jersey), the ranking member of the Senate’s Subcommittee on Housing, Transportation, and Community Development, unveiled a plan recently that would help dethrone New Jersey from that dubious title by:
- Requiring mortgage servicers to tell borrowers at the beginning of the foreclosure process they can remain in the home until state law requires them to leave;
- Requiring the servicer to make clear to the borrower he or she remains responsible for the payment of any taxes, assessments, and other fees during the foreclosure process;
- Requiring the servicer to make prompt notifications to both the borrower and the municipality where the property is located when it walks away from the foreclosure;
- Prohibiting servicers from walking away from an initiated foreclosure unless the servicer releases the lien on the property and provides proper notice to the borrower and municipality on loans backed by Fannie Mae [3] and Freddie Mac [4] and insured by the Federal Housing Administration [5].
- Requiring the Government Accountability Office [6] and the Consumer Financial Protection Board [7] to study and report on the prevalence and impact of abandoned foreclosures.
"Zombie foreclosures threaten our communities and scare away new homebuyers and investors, which leads to neighborhood blight and plummeting values of surrounding properties,” Menendez said. "This legislation stands up for New Jersey’s struggling homeowners, and prevents the banks from turning their backs on borrowers, on their neighbors, and on the community at large.”
New York recently enacted similar legislation [1] at the state level, when Governor Andrew Cuomo signed the bill, touted as a boon for the economic health and public safety of those communities in which these properties are located. It will also help those homeowners who are at risk of losing their homes due to foreclosure. Last month, Ohio enacted legislation at the state level [8] to expedite the foreclosure process and reduce the amount of time that properties remain vacant.
Five Star Institute President and CEO Ed Delgado has publicly called for solutions [9] to the vacant and abandoned property issue that is sweeping the country, calling it an "epidemic" and a "community crisis of national proportions." Earlier this year, Delgado met with HUD Secretary Julián Castro [10] to discuss the possibility of HUD issuing a mortgagee letter to address the vacant and abandoned properties issue.
Editor's note: The Five Star Institute is the parent company of DS News and DSNews.com.