Chris Christie Greases the Foreclosure Wheel
NEW YORK (TheStreet) -- New Jersey Governor Chris Christie signed a new law earlier this week that would speed up the foreclosure of vacant and abandoned homes, in an effort to reduce the foreclosure backlog that is crippling the state's housing recovery.
According to report by Housing Wire, the bill allows lenders to file a summary action to foreclose on mortgages when they are linked to vacant homes.
Lenders will have to provide "clear and convincing" evidence that the property in question is vacant and abandoned. If the court finds that the property fits the criteria, the sheriff is required to sell the property within 60 days of receipt of the writ of execution issued by the court.
In New Jersey, the number of days a mortgage is in foreclosure from the time a notice of default is filed till the completion of the foreclosure is now over 900 days, according to RealtyTrac..
New Jersey is one of 26 states that mostly adopt the judicial foreclosure process, where the lender has to prove in court that the borrower is in default. In most judicial states, the timelines to process foreclosures have been lengthy, as courts are overwhelmed with a huge number of cases in the aftermath of the crisis. The robo-signing scandal has also led courts to tighten scrutiny of the cases, adding to the delay.
In Northern New Jersey the share of homeowners in foreclosure rose to nearly 8% in 2012, while at the national level the rate has dropped to about 4%, according to data from the New York Federal Reserve. The increasing rate of foreclosures "creates challenges in sustaining and broadening the recovery we have in the region," said Jaison Abel, senior economist at the New York Fed in a recent press briefing. Downward pressure on the market is likely as these foreclosures work their way through the courts.
Vacant homes in foreclosure are a source of concern because they deteriorate over a period of time and depress the prices of other properties in the neighborhood.
The latest act could help reduce some of the downward pressure in neighborhoods where there is a large number of foreclosed, abandoned homes.
--Written by Shanthi Bharatwaj in New York
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