A recent report found that nationwide, there are approximately 20,000 so-called zombie foreclosures, which are residential properties that have been vacated by the owner but the foreclosure process has not yet been completed. With the owners gone, these abandoned properties are typically not maintained by banks, which potentially breeds blight, attracts violent crime, and brings down values of surrounding properties.
While the number of zombie properties has been in decline for the last couple of years, it is on the rise in New Jersey. About 4,000 of the nation’s 20,000 zombie properties (one-fifth) are in the Garden State.
Menendez and Booker, both Democrats from New Jersey, addressed HUD Secretary Julián Castro, Federal Reserve Chairman Janet Yellen, Comptroller of the Currency Thomas Curry, FDIC Chairman Martin Gruenberg, CFPB Director Richard Cordray, FHFA Director Mel Watt, and National Credit Union Administration Chairman Debbie Matz on the zombie foreclosure crisis with their letter, which was dated October 30, the day before Halloweeen.
“Zombie Halloween costumes may cause a scare, but what we really should be frightened about is the growing zombie foreclosure crisis haunting our communities,” Menendez said. “We sent this letter to top federal leaders today because we want to work together to end the unacceptable practice where banks sit on abandoned properties, hitting struggling borrowers with new debt and damaging the property values and quality of life in neighborhoods. It’s past time we put the health of our communities above bank profits.”
Menendez, Ranking Member of the Senate Subcommittee on Housing, Transportation and Community Development, introduced the Preserving American Homeownership Act earlier this year to address the zombie foreclosure crisis. The bill is aimed at helping homeowners who are underwater on their mortgages remain in their homes and mitigate the impact zombie foreclosures have on New Jersey communities and the economy.
“It’s past time we put the health of our communities above bank profits.”
—Senator Bob Menendez
FHFA General Counsel Alfred M. Pollard addressed the subject of vacant and abandoned residential properties earlier this week in his testimony before the Pennsylvania Senate Urban Affairs and Housing Committee & House of Representatives Urban Affairs Committee. Pollard reaffirmed that the FHFA’s first priority is avoiding foreclosures and listed several ways to potentially mitigate the vacant and abandoned property crisis: accelerated foreclosure of those properties, streamlined rules, neighborhood-based programs, uniformity, and vacant property registration.
Pollard also stated in his testimony that Fannie Mae and Freddie Mac, which are under the FHFA’s conservatorship, are partnering with National Community Stabilization Trust, a non-profit experienced in stabilizing distressed communities.
“Working together, they will leverage their ties to ‘boots on the ground’ community organizations and local non-profits and work closely with local governments to make timely and informed decisions about the best treatment of individual properties,” Pollard said. “These may include sales to nonprofits, rehabilitation of homes, loan modifications and, in some instances, demolitions.”
Click here to read the letter written by Menendez and Booker.
Click here to read the full text of Pollard’s testimony.