Vacant and Abandoned Properties on the Foreclosure Fast Track
In the U.S., vacant and abandoned properties in foreclosure can sit empty for two years or more depending on the state. During that time, the property does not receive the day-to-day care a tenant or homeowner would provide. It also means the property is more susceptible to vandalism, theft, and undetected damage.
Although mortgage servicers hire field service companies to preserve these properties, the property will deteriorate without a tenant or occupant no matter how much maintenance work is completed. The best way to ensure these vacant and abandoned properties remain in good condition is to accelerate the foreclosure process. Several states have introduced legislation to do just that.
Illinois and New Jersey both recently passed laws accelerating the foreclosure process for vacant and abandoned properties. Colorado already has laws in place addressing the issue of lengthy foreclosure timelines, while others, like Ohio, are considering it.
On Dec. 5 2012, the Illinois General Assembly passed Senate Bill 16, accelerating the foreclosure process for vacant and abandoned properties that will take effect on June 1. It is the most clear and defined bill that should be the model for other states considering accelerated foreclosure laws.
Illinois’ new law will reduce the foreclosure process from 600 to 90 days for vacant and abandoned properties. In addition to reducing the foreclosure timeline, the bill also has indemnified servicers against trespassing charges. They cannot be sued if the indicators for vacancy outlined in the legislation are met.
Additionally, the bill includes provisions to incent mortgage companies to help homeowners keep their homes providing pre-foreclosure counseling and bankruptcy relief. It also contains a provision to repair vacant properties that is to be funded by lenders.
New Jersey Governor Chris Christie signed into law Senate Bill 2156 on Dec. 3. The legislation is similar to the Illinois law in that it outlines conditions for determining that a property is vacant or abandoned. It too is a step in the right direction of returning empty homes to occupied status.
The states’ initiatives make sense and address what the field services and mortgaging servicing industries have been saying for some time. A lengthy foreclosure process is one of the major causes of property deterioration.