Owners and buyers of foreclosed homes in Connecticut may soon face a stringent registration process, if a bill passed in the state Senate and House gains traction. State Senate bill 951, an Act Concerning Neighborhood Protection, seems primarily concerned with neighborhood blight, as it allows local municipalities to enforce repair or maintenance of properties obtained through foreclosure and considered real-estate owned (REO) or purchased through foreclosure sales. The bill doesn't take the place of any ordinances adopted by local municipalities to prevent housing blight, to promote the maintenance of safe and sanitary housing and to provide for the "abatement of nuisances," according to a bill summary. Instead, it's designed as a tool for local governing bodies to track the ownership of foreclosed homes and, when necessary, to take enforcement action. If an owner does not register with the local municipality where the foreclosed home is located, the alternative -- registering with the Mortgage Electronic Registration System (MERS) -- is required. In either situation, proper contact information must be provided to better facilitate the communication and potential enforcement action between the municipality and the property owner. Under the provisions of the bill, the municipality must first issue a notice of violation to owners regarding the repair or maintenance of the property before taking enforcement actions within its rights under the relevant statute or ordinance. The House also passed the bill and then transmitted it to the Secretary of State late last week. If it becomes law, the bill would have sweeping effects on the way REO and foreclosure sale homes are managed. The state shows a relatively stable housing market, with only one in every 1,301 Connecticut housing units receiving a foreclosure filing in May, a fraction of the US rate (on in every 398 houses), according to RealtyTrac. Regardless of the low rate of houses moving into the foreclosure process, foreclosed homes pose attractive prospects to investors looking to buy distressed properties at discount as well as to owner occupants looking to buy a fixer-upper. Without the proper maintenance, however, a foreclosed home represents neighborhood blight and depreciation, and that's where the state bill comes in. HousingWire looks into the blight issue extensively in an upcoming magazine feature on REO and foreclosure auctions. To read about some auctioneers' neighborhood stabilization efforts, subscribe here. Write to Diana Golobay. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments.