Less than a month after Gov. Chris Christie vetoed a bill that would provide funding to transform foreclosed houses into affordable housing, another effort is under way to target abandoned properties for expedited foreclosures.
The measure, proposed by state Sen. Raymond J. Lesniak (D-Union), would allow banks to directly ask judges to enter foreclosure judgments once houses are abandoned.
The proposal is drawing support from groups representing banks, builders, real estate agents and housing advocates, who are eager to see the housing market be revived as quickly as possible.
Stanley Koreyva, chief operating officer of Amboy Bank, said banks have been slogging through the foreclosure process for vacant properties, which can take more than a year. He supports Lesniak’s proposal, which he said would help clear the real estate market and provide banks with more money they can use to increase lending.
The bill “would allow the bank to clean them up and put them back on the market, and take them out of the foreclosure mess we are in,” Koreyva said.
Lesniak said he is pursuing the issue due in part to an increase in the number of foreclosures expected in the state, as a result of a moratorium in 2010 and 2011 resulting from federal litigation.
Lesniak based the proposal on a section of his Residential Foreclosure Transformation Act, which was vetoed by Christie. This section would have allowed lenders to expedite the foreclosure process on abandoned properties by applying for a summary judgment from a judge.
The governor cited the expense of the earlier bill in his veto message, but supporters of increasing the speed of foreclosures of abandoned properties say this piece of the vetoed bill has its own merits.
Michael P. Affuso, vice president of the New Jersey Bankers Association, said judges have given reasons why homeowners should be given time to fend off foreclosures, but this reasoning doesn’t hold true for abandoned properties.
He added that the abandoned homes are collateral with no useful purpose until the banks gain control of them. “We care about trying to stimulate the economy and to get this collateral back, so that it can be put to a useful purpose,” Affuso said.
New Jersey Association of Realtors CEO Jarrod Grasso said he isn’t concerned that increasing the pace of foreclosures of abandoned properties would contribute to a glut. A more overriding concern is having houses sit in various stages of the foreclosure process for a long period of time. “We need to help stabilize the market,” he said.
New Jersey Builders Association CEO Timothy J. Touhey said the concept of quickening the pace of abandoned-home foreclosures was one reason builders support Lesniak’s original bill.
One of the biggest problems the homebuilding industry faces is depressed property value appraisals, which are further hurt by abandoned properties. “We have to rip off the Band-Aid. We need to get this issue behind us and get housing back on its feet,” he said.
State Judiciary spokeswoman Tamara Kendig said some cases require lenders to complete a final step before judges can issue a foreclosure judgment. “There’s no procedural delays for those cases that are ready to move forward to their next step,” Kendig said.
Housing advocate Staci Berger also supports the concept. She is the director of policy and advocacy for the Housing & Community Development Network of New Jersey. She said homes should not sit abandoned for roughly two years waiting for the foreclosure process to be completed.
“There are community (organizations) and investors that would like to restore those properties,” Berger said. “Part of the problem is that nobody can do anything with them. They’re an eyesore.”
Lesniak said the state’s economy would benefit from having the abandoned properties rehabilitated. “This is a way to get the ball moving forward in a positive direction,” he said.
Lesniak said he is aiming to reduce the time from lenders moving to foreclose to sending the properties to a sheriff’s sale from more than a year to three or four months.
“I’m not going to hold our economy hostage just because the governor doesn’t want to deal with the whole problem,” he said. “I want to keep moving the ball forward.”
Lesniak said he aimed to introduce a bill July 26 and bring it up for a vote with the Senate Economic Growth Committee on Aug. 9. He said he has approached Assemblyman Jerry Green (D-Plainfield) about sponsoring an Assembly version of the measure.
E-mail to: firstname.lastname@example.org
On Twitter: @kitchenman