EAST ORANGE, NJ - U.S. Senator Bob Menendez unveiled federal legislation that takes aim at zombie homes that plague New Jersey communities and drive down property values. New Jersey had the highest foreclosure rate in the nation in 2015 with over 35,000 filings and a recent report found the state has the most vacant zombie foreclosures in the nation with over 4,000.
"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, 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.”
Specifically, Sen. Menendez’s Preventing Abandoned Foreclosures and Preserving Communities Act of 2016:
- 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.
- Requires 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.
- Requires the mortgage servicer to make prompt notifications to both the borrower and the municipality where the property is located when it walks away from the foreclosure.
- Prohibits mortgage servicers on loans backed by Fannie Mae and Freddie Mac and insured by the Federal Housing Administration (FHA) 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.
- Requires the Government Accountability Office (GAO) and the Consumer Financial Protection Board (CFPB) to study and report on the prevalence and impact of abandoned foreclosures.