Published December 20, 2015
By Todd McHale and Joseph Green

DELRAN — No neighborhood seems to be spared.

Homes that once housed individuals and families are now abandoned and left to rot on the way to becoming the next eyesore in town.

"It's everywhere," Township Councilman Michael Schwartz said of the number of homes that are in the midst of being foreclosed on. "It's not unique to Delran. It's everywhere."

New Jersey ranks among the highest in the country with tens of thousands of foreclosure cases. But some in the township have had enough of dealing with the remnants of the housing crisis and believe the time has come to address the problem, given the stakes.

New Jersey accounted for 6,448 properties receiving a foreclosure filing in November, a rate of one in every 553 housing units — second highest among the states, according to RealtyTrac, the nation’s leading source for comprehensive housing data.

Resident Faith Bass, a South Jersey Realtor who leads a group known as the On the Move Team, has been compiling data on the issue locally for four months and found that 314 township homes were in some stage of foreclosure and that 122 were abandoned.

"It's staggering," Schwartz said of the findings, even though he's not surprised. "This is the repercussions from the housing fallout of 2008."

At a special Township Council meeting Monday, several real estate experts summoned by the On the Move Team discussed the effects of high foreclosure numbers and the options municipalities have in addressing them.

New Jersey licensed real estate appraiser Jason Kreisman discussed, in part, the effect foreclosed homes can have on the value of other properties in the same neighborhood.

"The foreclosure market can negatively influence, but not necessarily determine, the appraised value of a normal property," Kreisman said.

"Appraisers must draw on their expertise to conclude whether foreclosure data should be applied in a specific territory," he continued. "In areas saturated with foreclosures, appraisers might have little choice but to use distressed sales to support their evaluations."

In summary, Kreisman explained, determining whether foreclosures will decrease the value of other homes is not black and white, and many factors play a role.

"Distressed properties may have a negative impact on the value of surrounding homes in a specific geographical area, again depending on the trend in the area's marketplace," he said, noting that local, regional and nationwide external issues also impact value.

Raphael Kasen, community building specialist for the Housing and Community Development Network of New Jersey, said his organization consists of more than 250 corporations espousing affordable housing and neighborhood revitalization, among other causes.

During the meeting, Kasen gave a PowerPoint presentation outlining programs available to municipalities, including creating an abandoned property list; special tax sale and assignment of tax liens; accelerated tax foreclosure; and “Spot Blight” eminent domain, along with other tools towns can use to deal with the issue.

It's unclear how effective any of the programs would be to address Delran's specific needs. Several Burlington County municipalities have tried similar measures, including assessing liens, going after financial institutions and issuing fees for homes left empty, in an attempt to deal with the rash of vacant and abandoned properties after the housing market deflated years ago.

While a solution for every municipality remains elusive, some have managed to bring in some funds.

Palmyra projects to bring in about $75,000 in fees for vacant properties this year alone and even more as time goes on. The revenue is being generated through a local law passed in 2013 that requires owners of vacant properties to register and pay a $500 fee for the first year. The fee jumps to $1,500 for the first renewal of the registration, followed by $3,000 for the second, and $5,000 for the third and subsequent renewals.

Delran Council President Gary Catrambone said that the meeting was informative and that the township has also implemented some of the measures discussed in an effort to solve the problem locally.

Earlier this year, the municipality adopted an ordinance to fine banks and other lending institutions that fail to properly maintain empty properties.

Following state legislation passed to deal with the mass of foreclosures, Delran, similar to other towns in Burlington County, adopted an ordinance in January to hold banks and other lending institutions responsible for the care, maintenance, security and upkeep of the exterior of vacant homes.

If banks and mortgage companies fail to fix a problem at a vacant property within 30 days, they will be subject to fines of $1,500 a day. The fines increase to $2,500 a day if out-of-state creditors do not have a representative in New Jersey to deal with any issues at the property.

"It's not going to take long to get financial institutions' attention when they're getting fined $1,500 to $2,500 a day," Catrambone said.

Both Kasen and Bass value that as a formidable option, among others.

"If you put $1,500-a-day or $2,500-a-day fines on these banks, you'll bring in a lot of revenue," Bass said. "But it's not really about the revenue. It's about our neighbors."

More important, cracking down on financial institutions will discourage them from holding onto properties and not moving them.

"At least get banks to have management teams out there," Bass said. "At least board the homes up so kids don't get in."

However, officials admitted that the "zombie foreclosures" can make it difficult to enforce local measures.

A “zombie foreclosure” is when a homeowner abandons a house after the foreclosure actions are initiated, but the bank has not completed the legal action and taken possession of the house. The homeowner, now long gone, is still listed on the deed. The process can go on for years, leaving the property in limbo and no one maintaining it.

Bass and the team identified two properties in Tenby Chase and Millside Heights, both showing signs of disrepair and neglect, that have sat abandoned for four and seven years, respectively.

Finding the responsible party from financial institutions also can be a daunting task for a town trying to enforce its laws.

"It's a shell game," Schwartz said. "We send notices and they say they are no longer the representative."

Meanwhile, township officials plan to continue to search for more ways to deal with the housing mess.

"We're moving forward and being proactive as we can be," Catrambone said. "It takes time."

He said after the first of the year, the township plans to ramp up code enforcement, but he's not in favor of seizing properties through eminent domain.

"Everybody says, 'Why don't you just take the properties, fix them up and sell them?' " Catrambone said. "The reality is we're not in the position of taking properties," which could cost millions.

"We need to incentivize banks or homeowners to do it now or risk paying $40,000 to $60,000 a year in fines."

Schwartz said he just hopes his fellow council members don't wait too long to act, even if it takes hiring a private company as a resource to help the township tackle the problem.

"This is about protecting the people that are here and not letting banks hold them hostage," Schwartz said of allowing homes to remain vacant rather than modify a loan and keep the owner in the residence. "Neighborhoods are rotting from the inside."

Joe Green: 609-871-8064; email: [email protected]; Twitter: @JoeGreenBCT