OfflineThese 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.
Coincidentally, 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…’ mhaltman
Really good information, Randy. I have a few things I'd like to add for the benefit of all.
I have a confession to make, I'm a private sector guy, with little confidence that much will be passed or implemented by government in the near future to alleviate the zombie foreclosure situation. But I do believe that investors can assist with the problem and have incentive to do so.
I have an associate who just goes looking for these types of abandoned properties, looking for opportunities to put the property under contract and then market it to his extensive cash buyer list.
He finds them, has a team that tracks down owners and does some research on the status of the property, then makes a very low offer. He is particularly attracted to boarded up properties, but if it shows other signs of abandonment, that's okay too.
He only makes one improvement once he places the property under contract. If there are old boards on the windows, he replaces them with new boards. He says that this adds a little life to the property and his cash buyers view the property differently and are more likely to take a go at fixing and reselling it.
It's a little simple, I know, but simple things can pay off. He does his driving around in the back of a limo, with a hired driver, and a mobile office set up. That can't be all bad, can it? And he has helped out a lot of people who left their property behind and thought they were done with it. So if you're having trouble finding properties that are distressed, here's a new way for you to locate them.
Dallin Wall
Real Estate Training Team
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