No More Zombies on the Jersey Shore?

August 19, 2014 at 9:20 am Leave a comment

Late last week , the State that gave us Bruce Springsteen and a politically inspired traffic jam took another step in clamping down on so-called zombie property when Governor Chris Christie approved legislation authorizing municipalities to mandate that foreclosing lenders take more responsibility for vacant and abandoned property even before they have legal possession of the homes in question. The legislation is the latest – and what I believe to be misguided – attempt to deal with properties that have effectively been abandoned by delinquent homeowners but for which a foreclosure process has not been completed.

Municipalities in New Jersey have had authority to mandate that a foreclosing lender take steps to maintain vacant property since 2008, but this first section of New Jersey’s latest legislation gives you a feel for how much more expansive the law is:

   (New section) a. The governing body of any municipality may [make, amend, repeal and enforce] adopt ordinances to regulate the care, maintenance, security, and upkeep of the exterior of vacant and abandoned residential properties on which a summons and complaint in an action to foreclose has been filed. 

In addition, the law deals extensively with the regulation of out-of-state mortgagees commencing foreclosures.  Read between the lines and you have a state with a glut of abandoned property and a lot of frustration working with out-of-state lenders.

Not all the news is bad.  In 2012, New Jersey passed a law permitting lenders to put foreclosures on the fast track when they could prove that property is vacant and abandoned. Residential property is considered “vacant and abandoned” if a court finds that the mortgaged property is not occupied by a mortgagor or tenant, and at least two of more than a dozen conditions exist such as:

(1) overgrown or neglected vegetation;

(2) the accumulation of newspapers, circulars, flyers or mail on the property; and

(3) disconnected gas, electric, or water utility services to the property.  See N.J. Stat. Ann. § 2A:50-73 (West).

By the way, having just reread the list, it’s a good thing I don’t live in New Jersey since I rarely remember to cancel the paper when I am out of town and mowing the lawn is not my favorite activity.

Those of you with mortgages in New Jersey should certainly run this by your attorney and compliance people and everyone should pay attention to these latest developments.  New York is also taking a look at the zombie property problem and this legislation will certainly give greater impetus to proponents of a similar approach.


Entry filed under: Compliance, Mortgage Lending. Tags: , .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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