Due to a drastic increase of zombie properties in New York in 2014, the State of New York is looking to increase efforts against the rising tide of zombie foreclosures, which are properties that have been abandoned by the foreclosure process, by proposing legislation that would force mortgage lenders to maintain the homes until someone else assumes ownership.
Zombie foreclosures are not only a problem for the previous owner, but they can be an issue for an entire neighborhood. Zombie properties end up being vacant and because they aren’t being maintained, start to show obvious signs of neglect. They’re also more susceptible to vandalism, squatters, and crime, all of which can drag down the value of surrounding homes in the neighborhood.
According to data analyzed by Schneiderman’s office, zombie foreclosures increased by nearly 50% in 2014 as compared with 2013’s total. The figures from the AG’s office are close to figures released in a recent report from RealtyTrac, which also found that New York has the third-highest state total of abandoned properties.
New York State Attorney General Eric Schneiderman is looking to minimize the amount of these types of neglected homes by submitting an expanded version of a bill called the Abandoned Property Neighborhood Relief Act that he first introduced in 2014.
The bill is looking to reduce the amount of zombie foreclosures by:
- Informing homeowners of their rights. The bill would require lenders to tell owners of a foreclosed home that they still have the right to live in their home until they are ordered out by a judge. Typically homeowners abandon their property as soon as they receive a foreclosure notice.
- Banks, mortgage lenders and servicers will be required to identify and then maintain any vacant properties, for which they are the lender, shortly after they are abandoned. The current law doesn’t require mortgage lenders or servicers to maintain vacant properties until the foreclosure process comes to an end which in many cases can take a long time.
- Any banks, mortgage lenders and/or servicers that are found to be in noncompliance of these new laws will be fined. The fines would be deposited into fund that would help continue support the local government’s efforts in reducing these zombie properties.
- Another point of the bill is to create a statewide registry called the Vacant and Abandoned Property Registry which can help local governments with the enforcement of property maintenance laws. Mortgage lenders and servicers would be required to register zombie properties with this registry.
According to Schneiderman’s office, the bill is expected to be sponsored by Independent Democratic Conference Leader and Senate Coalition Co-Leader Jeffrey Klein and Assembly Member Helene Weinstein.
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