New York Attorney General Eric T. Schneiderman announced Thursday the introduction of a newly expanded Abandoned Property Neighborhood Relief Act, legislation aimed at curbing the number of abandoned foreclosed homes, also known as zombie foreclosures.
The bill requires banks and mortgage servicers to maintain vacant and abandoned residential properties throughout the foreclosure process, a responsibility that banks often neglect, Schneiderman said.
Banks that fail to maintain the properties will be forced to pay penalties that local governments can then use to enhance their enforcement efforts under the Act.
The bill, sponsored in the New York Senate by Senate Coalition Co-Leader Jeffrey D. Klein and in the Assembly by Judiciary Committee Chair Helene Weinstein, comes amid new data showing a troubling increase in the number of zombie properties statewide.
According to RealtyTrac data, zombie property foreclosures increased by nearly 50% from 2013 to 2014, bringing the total number in the state to 16,701. As a result, almost one in five residential foreclosures is now considered a zombie property. On Long Island, the problem continues to grow with the number of zombie homes increasing by 62% between 2013 and 2014, bringing the total number to 4,048 - the highest in the state.
"Ever since the housing crash, too many Long Island communities have been weighed down by the burden of abandoned and vacant properties," said Schneiderman. "These zombies will not to come back to life on their own and many local communities lack the resources to effectively track them down and revive them. Its time for the state legislature to finally pass the Abandoned Property Neighborhood Relief Act so that we can empower municipalities to take back their neighborhoods and end the proliferation of zombie properties.
The bill would address the problem of zombie properties in several ways, according to a release from Schneiderman's office:
First, since many families do not understand that they have the right to remain in their home until a judge declares the foreclosure complete, the bill would require that homeowners be provided with early notice that they are legally entitled to remain in their homes until ordered to leave by a court. The bill would also make it unlawful for a mortgagee or loan servicing agent, or a person acting on their behalf, to enter a property that is not vacant or abandoned for the purpose of intimidating, harassing or coercing a lawful occupant in order to induce them to vacate the property, thereby rendering it vacant and abandoned.
Second, in the event that homeowners do leave their property before the foreclosure is complete, the bill would require mortgage lenders and their servicers to take responsibility for properties soon after they have been vacated - and not, as under current law, at the end of a lengthy foreclosure process. Under this provision, lenders and their servicers are required to identify, secure, and maintain vacant and abandoned properties and pay for their upkeep. The bill would also establish a periodic inspection requirement for mortgagees and loan servicing agents to determine if property subject to a delinquent mortgage is currently occupied.
Third, to help municipalities identify and secure zombie properties, the bill would require mortgagees or their agents to electronically register these properties with a newly created statewide Vacant and Abandoned Property Registry to be established and maintained by the OAG. The registry would be supplemented by a toll-free hotline that community residents can use to report suspected vacant and abandoned properties to the OAG and receive information regarding the status of registered properties, including the identity of the mortgagee or agent responsible for maintaining them. Banks that fail to register an abandoned property will be subject to civil penalties.