Thursday, July 21, 2016

Ohio Law Fast-Tracks Foreclosures

What is being done to prevent zombie homes in Ohio?

The foreclosure crisis that has gripped Ohio since the collapse of the housing market in 2008 has littered the state with vacant and abandoned residential properties often referred to as zombie homes. Now, a fast-track foreclosure process has been put in place with the signing of HB 390 (Sales tax-exempt sale of natural gas by municipal gas company). This measure is aimed at expediting the foreclosure process and mitigating problems associated with vacant properties.

The law is the culmination of a three-year effort by Ohio lawmakers and community groups that have been working to update the states foreclosure laws. Ohio has long been a judicial foreclosure state which means that the lender must file a lawsuit to initiate the foreclosure, and the process can take several months or longer. Because of these legal requirements, foreclosed homes often remain vacant as long as two years. These so-called zombie homes typically fall into disrepair, blight residential communities, and ultimately drag down property values of neighboring homes.

The fast-track process is designed to accelerate foreclosures to six months which will enable mortgage servicers to take possession of the properties in the hope that they can be repaired and sold. In order for a property to be fast-tracked, the loan must be in default, and the there must be evidence that the home has been abandoned. Evidence of a "walk-away" includes boarded up windows, disconnected utilities, property deterioration and vandalism.

Ohio is one of many states, particularly those that require judicial foreclosures, that have been plagued by zombie homes; and the state alone in taking action to handle the epidemic of abandoned properties. In New York, for example, the governor recently signed a law that requires lenders and mortgage servicers to maintain properties that are in the process of being foreclosed. Congressional lawmakers are also considering a measure that would impose new responsibilities on mortgage lenders and servicers for maintaining foreclosed homes.

In the meantime, homeowners who are facing foreclosure have other options. In some cases, it may be possible to negotiate a loan modification with the lender. In addition, filing a bankruptcy petition will also stop the foreclosure process, provides homeowners with the ability catch up on delinquent payments and arrange a payment plan that can let them stay in their home. If you are at risk of losing your home, an experienced bankruptcy attorney can help you explore your options.

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