By Christie Duffy
John Arnold lives next door to a home that’s been in foreclosure for months. He says he and his neighbors stay on top of any problems.
“I call the town about it to make sure that the grass is maintained and the leaves,” said Arnold of Ridgefield.
Not everyone near a foreclosure is so lucky.
“Foreclosed properties affect the value of the neighborhood because appraisers have to use those comps to compare to other properties,” explained real estate broker Edison Salazar.
But a new state law is aimed at helping avoid blighted properties. Municipalities are now allowed to fine mortgage lenders if they don’t maintain properties in foreclosure.
Legal researchers say they don’t know of any other state with a law like it on the books.
“With these foreclosed properties being neglected, it deteriorates a neighborhood, devalues real estate values. It’s an urban and suburban problem,” said Assemblyman Ralph Caputo.
Caputo was a key sponsor behind the law. He says mortgage lenders now also have to notify local municipal officials when they plan to foreclose.
Fannie Mae, the largest mortgage lender in the country, says they’re only responsible “once a foreclosure is finalized” and point out they are “committed to maintaining all Fannie Mae-owned properties.”
All the realtors and brokers we talked to are in favor of the new law, as are local officials.
“Many times these properties go abandoned, unattended and no one knows because they don’t register with anybody,” said Irvington Mayor Wayne Smith.
Irvington has a large number of foreclosed homes. One’s gutter has fallen across the driveway and juts toward the neighboring home. One window is boarded. The grass is overgrown and the front screen door swings open.
The mayor says Irvington already has an ordinance in place to keep blighted properties in check but often it’s tough to find out who is responsible for a vacant home.
If no one can be located, it’s the city that pays the price, cleaning up blighted properties and securing them for safety. But the new law will actually allow municipalities like Irvington to potentially make money through fines, and the added pressure on lenders to come forward.
“It’s just an additional tool we have. A local ordinance mandates the same thing, but having it statewide, hopefully there will be statewide enforcement,” Smith said.
And it may come in handy. New Jersey is trending up in bank repossessions as the rest of the country is trending down.