Bettering Plainfield with the facts since 2005

Monday, August 25, 2014

Will new foreclosure law help Plainfield?

A private crew was cutting the grass of this Kenyon Avenue foreclosure
Sunday. Did the bank get the memo?

Will a new foreclosed properties law signed by Gov. Christie this past Friday help Plainfield solve its problems with vacant, foreclosed and abandoned properties?

The new law, sponsored by a South Jersey assemblyman sets stiff DAILY fines for creditors (banks and others) whose properties are in violation of municipal code (see Ledger story here).

How serious a problem is foreclosure in Plainfield? I know of no direct statistics, but RealtyTrac (see their website here), which follows the foreclosure process, indicates there are currently nearly 900 properties in Plainfield that are either foreclosed, in pre-foreclosure, being auctioned or bank-owned.

A browse through these listings will also give you a little insight into the scam that was being played out in the housing 'bubble'. Can you imagine a residence on Westervelt Avenue with a $615,000 mortgage? Or one on Myrtle Avenue with a $557,000 loan? How about a residence on Netherwood Avenue with a $582,000 mortgage? Or a Crescent Avenue property with a $1.8 million 'transfer value'? You get my drift.

I wrote previously about some South Jersey towns' efforts to set up a REGISTRY of foreclosed and vacant properties (see post here). These registries require owners of vacant and foreclosed properties to sign up (for an annual fee of $1,000, with penalties for delaying entry into the program).

The new state law gives municipalities the ability to assess fines up to $2,500 PER DAY per property for out-of-state creditors, an amount that ought to catch their attention.

The first benefit of having a registry, as I see it, is that many communities -- Plainfield included -- simply do not know just how many abandoned, vacant and foreclosed properties there are.

The second, more mercenary, benefit is help to the city's bottom line. If the cost to join the registry is $1,000 per property per year and there are 500 properties (for the sake of illustration) -- what would the income to the city be? Could Plainfield use an extra $500,000?

That's just the registry; the state law allows for the other penalties for failure to meet code requirements (lawns being one of the most obvious). With fines of $1,500 or $2,500 PER DAY, you can see where this is going.

But that's not all. Vacant and foreclosed properties also invite other issues and problems that impact the community -- squatting and scrapping, but also vermin infestations. In fact, in some communities the health officer has had to get involved because of public safety issues involving wild animals and insect-born diseases.

According to the Ledger story, the NJ League of Municipalities is preparing a webinar to help local officials get up to speed on this issue and put the state law into effect.

Let's hope some of our elected officials are paying attention.

  -- Dan Damon [follow]

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Anonymous said...

How about the $152.9 million bond on the Muhlenberg property?

Anonymous said...

Let's go with the $500K year figure you mentioned. After paying city workers($16 a hour, administrative costs, etc) Plainfield will be lucky to collect $100K year. They are better off holding more tax sales. Only benefit to this law would be if Plainfield could foreclose on some of the properties and auction them. It would create some income plus get the properties back on the tax map.