June 23, 2016
State measures fight zombie properties
Joe McIntyre/staff photographer
A zombie house is shown at 7 5th Ave. in Cortland. Zombie properties are vacant sites that are typically in foreclosure and have fallen into disrepair due to a lack of maintenance.
ALBANY — Municipalities struggling to rehabilitate and eliminate long-vacant properties have received assistance from the state Legislature in the form of an amendment Friday forcing banks and mortgage holders to either maintain properties or face hefty fines.
The legislation will go into effect immediately once signed by Gov. Andrew Cuomo.
The legislation was passed as part of a series of amendments made to the state’s 2016-17 budget, passed in March.
State and municipal leaders have been calling on theLegislature to establish rules aimed at helping communities across the state deal with so-called zombie properties, or vacant homes and properties typically in foreclosure that have fallen into disrepair due to lack of upkeep.
Zombie properties tend to be eyesores in the communities where they’re located and can potentially bring down property values in neighborhoods. Until last week, there wasn’t much state officials could do tohold accountable the property owners — in most cases banks and mortgage companies — due to a lack of information about who actually owned theproperty, who was responsible for maintaining it, or how to contact them.
Under the new regulations, a vacant building registry would be maintained by the state, which local officials can use to access contact information for property owners and mortgage holders.
The law also gives municipalities the power to enforce the maintenance provisions of state law. Violators risk fines of $500 a day per property fornoncompliance.
The new rules also codify the commitment made in 2015 by various banks and lending institutions to fight zombie properties by entering into a best practices agreement with the state Department of Financial Services. There were 11 banks andmortgage companies, representing 70 percent of the state housing market, entering into that agreement.
The city of Cortland — as well as the villages of Homer, Marathon and McGraw — are all members of the New York Conference of Mayors and Municipal Officials, an organization that has been calling for the passage of such legislation for years.
Wade Beltramo, general counsel for NYCOM, said via email Tuesday he thinks the new legislation goes a long way in helping municipalities revitalize their communities.
Specifically, Beltramo said he is hopeful the new maintenance requirements will lead to a reduction of blighted properties and said the abandoned property registry should serve as a useful tool for officials.
“While they are only part of the problem, vacant and abandoned properties that languish in the foreclosure process have proven to be particularly difficult for local officials to deal with,” Beltramo said.
Cortland Mayor Brian Tobin said Wednesday he is particularly pleased with the amendment that provides homeowners going through foreclosure with a bill of rights.
Under the law, people living in a property going through foreclosure do not have toleave until the property is soldat auction. The hope is thatthose people will not only have to worry about finding a new place to live right away, but that they will keep up the property as well.
“The city is very pleased to see the state passing this legislation because it will be a resource,” Tobin said. “It gives them more information on their rights and what their options are.”
In the end, however, there is little that the new legislation will address that the city hasn’t already done.
With laws in place like the rental housing registry and a vacant property law, which imposes steep fines for property owners who fail to maintain theirproperties, Tobin said the new state legislation just validates that the city has been on the right track to eliminate zombie properties.
He added that anything that holds property owners accountable, be it locally or statewide, is a minor victory in the effort to eradicate zombie properties.
“The biggest thing is, it’shelping out everyone in the state,” Tobin said. “It won’t solve the issue, but it’s a major step.”
At a glance:
The new “zombie house” amendments passed by the state Legislature are being hailed as the first step to ending the challenges facing municipalities across New York trying to hold owners accountable for their vacant properties. Here are the new regulations under the law:
- Banks and mortgage lenders are now obligated to maintain one- to four-family residential real properties, even while a foreclosure
action is pending;
- State law requires periodic inspections to determine whether properties have been abandoned;
- Banks and mortgage lenders can face fines of up to $500 per property per day for failure to maintain zombie properties;
- Municipalities are authorized to enforce the maintenance provisions of the state law;
- A statewide registry for abandoned residential property under the
supervision of the state Department of Financial Services will be created in addition to a toll-free hotline for residents to report zombie properties;
- The state will make the information in the zombie property registry available to local government officials;
- State laws now require the court to give homeowners in foreclosure a consumer bill of rights published by the state Department of Financial Services.
In addition, back in 2015, Gov. Andrew Cuomo announced 11 banks and mortgage lenders had agreed to comply with efforts to combat zombie properties in the state.
Here’s a list of mortgage holders the new budget amendments would expect compliance from, which represents roughly 70 of the state’s housing market: Wells Fargo, Bank of America, Citi Mortgage, Ocwen, Nationstar, PHH, Green Tree Servicing, Astoria Bank, Bethpage Federal Credit Union, M&T Bank, Ridgewood Savings Bank.
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