MILWAUKEE (AP) — A bill headed to the Wisconsin Senate floor would strip the city of Milwaukee of its ability to force lenders to quickly sell “zombie homes,” abandoned, foreclosed properties that depress property values and add to urban blight.
The Assembly bill would undo some of the powers to battle zombie homes that Milwaukee gained from a 2015 Wisconsin Supreme Court decision. The measure narrowly cleared a Senate committee last week, with the Committee on Insurance, Housing and Trade passing the bill on a 3-2 vote by a paper ballot rather than at a public meeting, the Milwaukee Journal Sentinel reported.
Milwaukee Mayor Tom Barrett argues the bill would worsen the zombie home problem in his city and other communities.
“I don’t know why someone would want to worsen that problem,” Barrett said.
In a unanimous ruling, the Wisconsin Supreme Court last year upheld a 2012 law that strengthened Milwaukee’s hand in dealing with zombie homes.
The justices said that when a court declares a foreclosed property to be abandoned, the lender must offer it for sale. Foreclosed properties are auctioned off at sheriff’s sales and lenders often buy the properties themselves.
The lawsuit was brought by Legal Action on behalf of an elderly Milwaukee woman who mistakenly assumed she lost her home after a foreclosure suit, only to later learn she still owned it and was responsible for taxes and other costs of homeownership.
A homeowner keeps title to the property until a foreclosure is complete and the home is sold at a sheriff’s sale. But many homeowners assume they lost title when the foreclosure begins and they abandon their property.
“This is why it’s referred to as a zombie” property, Barrett said, explaining the property sits vacant and is a target for vandals. “Grandma is no longer around, grandma has moved on, grandma has zero economic incentive to improve the property.”
Current law requires a lender to sell an abandoned foreclosed property after a five-week “redemption” period, during which the homeowner has an opportunity to pay the mortgage. The Assembly bill would give the lender one year to decide what to do with the property. At the end of that period, the lender could sell the property or walk away, leaving it in the original owner’s hands — even if that person erroneously assumed they lost title and is long gone.
The bill’s lead Assembly sponsor, Republican state Rep. Terry Katsma of Oostburg, contends the proposal would help address the lingering foreclosure crisis — an argument Milwaukee officials dispute.
The measure already has passed the Assembly and would head to Republican Gov. Scott Walker for his signature if the Senate approves it. But it’s unclear whether the bill will make it to the Senate on March 15, the only remaining floor debate of the session.