By Heather Hecimovich Hough
Foreclosing plaintiffs should be compelled to bring abandoned properties to sale because judicial economy requires it and because failure to do so causes municipalities and taxpayers to suffer adverse, unfair and unjust consequences.
Mortgage lenders seek the court’s assistance when foreclosing by way of order and judgment. To stall a foreclosure or decide after judgment is entered not to pursue the foreclosure to sale is to render the court’s order useless.
If mortgage lenders were compelled to complete a foreclosure action, these lenders would then have to carefully analyze if foreclosure is the best course of action upfront before filing an action with the court. If such analysis were regularly performed before commencing action, fewer properties would be abandoned quite so quickly and fewer foreclosures would weigh on the state’s already strained judicial resources.
A tangible property is attached to a foreclosure proceeding. The consequences of an unexecuted money judgment are limited to the parties in the suit.
An unexecuted foreclosure judgment, on the other hand, significantly affects the community surrounding a tangible property. No other civil action so adversely affects non-parties who do not have a voice in the proceeding or some sort of recourse.
When a mortgage lender fails to bring an abandoned property to sale, the taxpayers and the municipality bear the brunt of such a decision. Abandoned properties in foreclosure limbo can give rise to neighborhood blight.
These properties, neither cared for nor maintained by either party involved in the original real estate transaction, are left to decay and depress property values in the surrounding neighborhood and community. These eyesore properties attract vagrants and thieves (and thus, crime) to a neighborhood.
Windows are boarded up, lawns become overgrown, and property maintenance is not performed. The value of the abandoned property rapidly decreases and, as a result, the value of neighboring properties plummets.
Surrounding homeowners are faced with notably less-marketable properties. Municipalities are forced to maintain and monitor these abandoned properties with taxpayers footing the bill.
Further, valuable municipal resources from real estate tax proceeds are left unpaid. If taxes remain unpaid, the municipality’s last option is to take ownership through tax foreclosure, again at taxpayers’ expense.
A compelled sale significantly reduces the harm. A prompt sale equates to the prompt return of the property to the real estate market.
An invested buyer becomes responsible for the care and maintenance of the property, lifting the burden from the municipality and its taxpayers. Property taxes are paid, generating additional municipal resources.
Blight is reduced and even eradicated once the property becomes inhabited. Compelling mortgage lenders, the most involved and capable party to the foreclosure action, to sell abandoned properties serves the best interests of those who are affected most by abandoned properties — the courts, the community and taxpayers.