New Legislation Aimed at Expediting Sale of Foreclosed & Abandoned Property
WASHINGTON, D.C. – July 27, 2015 – (RealEstateRama) — Congressman Brian Higgins (NY-26) joined members of the Distressed Properties Task Force in Western New York to announce the Vacant Homes Act, a bill designed to expedite the sale of underwater homes and foreclosures to prevent the buildup of vacant homes in neighborhoods and communities.
“Vacant, foreclosed homes tarnish communities and leave neighbors living on these streets with no recourse,” said Higgins. “The existing system lacks urgency to move properties back into the hands of caring homeowners. While properties remain in limbo, communities suffer. The Vacant Homes Act places new time limits on the process to protect neighborhoods.”
Each year approximately 2,000 mortgage foreclosures are filed in Erie County. In New York, it takes an average of more than 3 years to move foreclosed homes to auction, leaving properties vacant, abandoned, and deteriorating for extended periods of time to the detriment of local communities. Higgins’ bill will place time limits on how long banks and mortgage holders can hold property before moving to a sale, to protect neighborhoods from the burden of lingering vacant properties.
A May 2015 report on New York’s Foreclosure Process by the New York State Department of Financial Services notes that “New York State has been reported to have the fourth longest foreclosure timeline in the nation, averaging 934 days from the date of filing of the foreclosure action to the sale of the property at auction – nearly a year longer than the national average of 604 days.”
Under Higgins’ bill, mortgage owners or banks have 90 days to respond to an offer. If an offer is rejected, under this bill mortgage owners would have to state the reason for rejection, provide an economic analysis demonstrating fair market value exceeds the offer or demonstrate a reasonable expectation that the owner will receive an over above the current one within 12 months.
Kate Lockhart, a member of the Distressed Properties Task force and paralegal at the Western New York Law Center added, “What the Congressman’s bill means for families is that they have a better option than abandoning the home after deciding they can’t afford to remain there. Rather than waiting for the foreclosure to be completed on their home, which can take years due to the banks inaction, they can put the house up for a short sale, where the bank agrees to take less than what is owed on the property, and have the bank respond in a timely manner. By requiring banks to respond to short sale offers within 90 days, and by requiring banks to give legitimate reasons for denying offers, we can ensure that these homeowners are not being ignored as they try to settle a very stressful foreclosure situation. Rather than remaining in a home where their family’s future is uncertain, a homeowner could sell their property with the bank’s permission and a new family could move into the neighborhood.
Western New York still maintains vacancy rates higher than the national average. According to the U.S. Census Bureau, national vacancy rates in the first quarter of 2015 were 7.1 percent for rental housing and 1.9 percent for homeowner properties. By comparison, 2014 annual data as calculated by the Census Bureau put homeowner vacancy at 8 percent for rental property and 2.1 percent for homeowner units in the Buffalo/Cheektowaga/Tonawanda region.
Congressman Higgins serves as co-chair of the Revitalizing Older Cities Task Force, a bi-partisan Congressional working group dedicated collaboration on vacant housing issues and other unique challenges facing older, industrial communities. The Task Force works closely with the Northeast-Midwest Institute, a non-profit and non-partisan policy and research-based organization whose mission is to promote issues important to 18 Northeastern and Midwestern States.