New Bill Seeks to Stop Zombie Foreclosures

New Bill Seeks to Stop Zombie Foreclosures

June 27, 2016
The New York Department of Financial Services (DFS) has fined PHH Mortgage Corp. $119,000 for failing to maintain a so-called “zombie” property under the Department’s Vacant and Abandoned Property Law

Sen. Bob Menendez (D-N.J.) is planning to introduce the Preventing Abandoned Foreclosures and Preserving Communities Act of 2016, which is designed to address the issue of so-called zombie foreclosures.

In introducing the bill, the senator admitted that its inspiration came from his state’s dismal housing environment—New Jersey had the highest foreclosure rate last year more than 35,000 filings and the most vacant zombie foreclosures, impacting more than 4,000 properties. The legislation would requires 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, while also making it clear that the borrower is responsible for the payment of any taxes, assessments, and other fees during the foreclosure process. The bill would also mandate the Government Accountability Office and the Consumer Financial Protection Bureau to publish a 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,” said Sen. Menendez, who serves as the Ranking Member of the Senate’s Subcommittee on Housing, Transportation, and Community Development. "We need to do all we can to keep families in their homes and ensure mortgage lenders are invested in the communities they serve.  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.”