A new study by the Federal Reserve Bank of Cleveland concludes that fast-tracking foreclosures in states that handle the process through the courts could lead to significant savings for all parties. In the judicial states of Ohio and Pennsylvania, Fed researchers estimate savings of at least $24 million annually for various stakeholders.
When a foreclosed home sits vacant, they explain, "there are additional costs to the creditor or taxing authority due to the accelerated depreciation of unoccupied homes, which are less well maintained and more likely to be vandalized." Local communities and owners of the surrounding properties that lose value shoulder additional costs.
Ohio legislators created a private mortgage foreclosure fast-track for tax foreclosures in 2006 and are now considering a pilot foreclosure fast-track for properties abandoned by homeowners. However, the need for input from creditors, attorneys, communities, and the judiciary makes it difficult to draft legislation that balances the interests of creditors and homeowners.