Senators Call Federal Regulators to Action on Zombie Foreclosures

writing-on-paper1 [1]U.S. Senators Bob Menendez and Cory Booker [2] have written a letter [3] to federal banking and housing leaders urging them to take action on the “zombie” foreclosure crisis which has plagued the nation.

A recent report found that nationwide, there are approximately 20,000 so-called zombie foreclosures, which are residential properties that have been vacated by the owner but the foreclosure process has not yet been completed. With the owners gone, these abandoned properties are typically not maintained by banks, which potentially breeds blight, attracts violent crime, and brings down values of surrounding properties.

While the number of zombie properties has been in decline for the last couple of years, it is on the rise in New Jersey. About 4,000 of the nation’s 20,000 zombie properties (one-fifth) are in the Garden State.

Menendez and Booker, both Democrats from New Jersey, addressed HUD Secretary Julián Castro, Federal Reserve Chairman Janet Yellen, Comptroller of the Currency Thomas Curry, FDIC Chairman Martin Gruenberg, CFPB Director Richard Cordray, FHFA Director Mel Watt, and National Credit Union Administration Chairman Debbie Matz on the zombie foreclosure crisis with their letter, which was dated October 30, the day before Halloweeen.

“Zombie Halloween costumes may cause a scare, but what we really should be frightened about is the growing zombie foreclosure crisis haunting our communities,” Menendez said. “We sent this letter to top federal leaders today because we want to work together to end the unacceptable practice where banks sit on abandoned properties, hitting struggling borrowers with new debt and damaging the property values and quality of life in neighborhoods. It’s past time we put the health of our communities above bank profits.”

Menendez, Ranking Member of the Senate Subcommittee on Housing, Transportation and Community Development, introduced the Preserving American Homeownership Act [4] earlier this year to address the zombie foreclosure crisis. The bill is aimed at helping homeowners who are underwater on their mortgages remain in their homes and mitigate the impact zombie foreclosures have on New Jersey communities and the economy.