These abandoned properties tends to be neglected, possibly vandalized and most definitely eyesores detrimental to the value of the other houses around them.
We also discussed how the snail’s pace of the foreclosure process, currently more than 1,000 days in a judicial state like New York, means that the problem will likely be a long-lasting one.
Coincidently, an article that appeared in MortgageOrb yesterday spoke to the fact that the Consumer Financial Protection Bureau (CFPB) is currently investigating the way in which lenders are handling this issue, seeking to find potential solutions to these Zombie Foreclosures that will benefit those being affected.
The affected includes both the borrower as well as the neighborhood.
According to a report from Reuters, ‘…Laurie Maggiano, the CFPB’s servicing and secondary markets program manager, said during a Federal Reserve Bank of Cleveland conference last week that the bureau is “beginning to look very closely at abandoned properties and zombie foreclosures.”
More specifically, the CFPB will be investigating to see if lenders and servicers are properly notifying homeowners who have abandoned their homes that the homeowners are still legally responsible for the properties. That includes general maintenance and upkeep, which becomes an issue if the town or city where the property is located has blight laws on the books, but also ensuring that the property is properly secured and safe – and that there are no squatters living there.
At issue is whether lenders are properly notifying borrowers as to what stage they are at in the foreclosure process – including whether the debt has been written off or whether a foreclosure has actually been completed – by way of their monthly statements.
“There is direct borrower harm if a borrower believes a foreclosure on their property has been conducted and they are no longer responsible, and months or years later find out that they are, that there was never a foreclosure and they have large financial responsibilities that they never knew about,” Maggiano said…’