Money Watchers: Zombie foreclosures
A house on a corner lot in Providence's Olneyville section sits boarded up. Graffiti is scrawled on a wall.
It's called a zombie foreclosure.
"The person who took a mortgage on it has been gone from the scene for a couple of years," said Frank Shea, executive director of the Olneyville Housing Corp.
"The bank that holds the mortgage or services the mortgage initiated a foreclosure process, but hasn't completed that. So, there isn't a responsible party looking out for this property," he said.
There are many of these properties all over the city -- in Olneyville alone, about a dozen.
Shea explained why finding a responsible property owner is crucial to the redevelopment of the neighborhood.
"For us, a corner property like this, across the street from a day care on a block where we have three homeowners who purchased homes in the last 18 months really has a huge negative impact on everyone in the neighborhood," Shea said.
Just ask a resident who lives on the street.
"It is an eyesore and it should be fixed," the homeowner said.
Two bills are being introduced at the State House this week to help.
One would require the party holding the mortgage on a property to maintain it at least up to local codes if it becomes vacant or face fines. The other measure would require the financial institution that forecloses on the property to post a bond to insure that they maintain the property.
Both bills, although different approaches, are aimed at making someone responsible for these properties.
"It is the bank's responsibility. So, you don't want to have anything that would interfere with them doing it," Shea said.
Shea said the goal is to have legislation in which the bank essentially takes over, becoming the responsible party, and disposing of the properties quickly.