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Post date: April 27 2015

A.G. Schneiderman, Senate Coalition Co-Leader Klein, and Assemblywoman Weinstein Introduce New Legislation to Combat Rise of “Zombie Homes” Across New York City

Legacy Of Housing Crash Continues To Spread Across New York City, As Number of Abandoned, Deteriorating, And Foreclosed “Zombie Homes” Spikes By 38% In One Year According To RealtyTrac Data

Abandoned Property Neighborhood Relief Act Would Protect Homeowners And Empower Communities To Rein In Properties That Become Hotbeds For Crime, Vandalism, And Drug Use

Bill Would Require Mortgage Lenders to Maintain Vacant And Abandoned Properties Earlier and Demand Servicers Notify Homeowners Of Their Rights; Penalties Would Fund Efforts By Local Governments To Address Widening Problem

Schneiderman: It’s Time To Stop Zombie Homes From Eating Away At Our Communities

BRONX –Attorney General Eric T. Schneiderman, Senate Coalition Co-Leader Jeffrey D. Klein, and Assemblywoman Helene Weinstein announced today the introduction of a newly-expanded Abandoned Property Neighborhood Relief Act, legislation aimed at stemming the rising tide of abandoned foreclosed homes (“zombie homes”) across New York. The bill (A.6932/S.4781) requires that banks and mortgage servicers maintain vacant and abandoned residential properties throughout the foreclosure process, a responsibility that banks often neglect. Banks that fail to maintain the properties will be forced to pay stiff penalties that can then be used by localities to enhance their enforcement efforts under the Act.

The bill, sponsored in the Assembly by Judiciary Committee Chair Helene Weinstein (D-Brooklyn), comes amid new data showing a troubling increase in the number of zombie properties across New York State. According to RealtyTrac data analyzed by the Office of the Attorney General (OAG), zombie property foreclosures increased by almost 50% from 2013 to 2014, bringing the total number of zombie properties in NYS to 16,701. As a result, almost 1 in 5 residential foreclosures is now a zombie property. In New York City, the problem continues to grow, with the number of zombie homes increasing by 38% between 2013 and 2014, bringing the total number to 3,525.

“Years after the housing crash, abandoned foreclosed homes continue to be a blight on too many New York neighborhoods,” said Attorney General Schneiderman. “It’s time to stop these zombie homes from eating away at our communities. Too often, these vacant homes rapidly deteriorate, dragging down property values and creating hotbeds for criminal activity. The Abandoned Property Neighborhood Relief Act would protect the rights of families facing foreclosure and equip local communities with the resources they need to effectively deal with zombies in their neighborhoods. Let’s finally put an end to the burdens placed on New Yorkers coping with high rates of foreclosure and demand that banks and other lenders take greater responsibility for properties that have been abandoned by homeowners.”

Senate Coalition Co-Chair Jeff Klein (D-Bronx/Westchester), said, “Zombie foreclosures have rotted away property values, boosted criminal activity and ultimately decreased the quality of life for residents in the Bronx and beyond. With the introduction of the Abandoned Property Neighborhood Relief Act, we are one step closer to curing the blight these properties bring to our neighborhoods – holding big banks accountable for their upkeep and mandating rigid reporting requirements throughout the state. In the coming weeks and months, I look forward to working with Attorney General Eric Schneiderman and my colleagues in the Senate and Assembly, as we fight to pass this important legislative package for all New Yorkers.”

"In too many neighborhoods in the city and across the State, mortgage lenders have permitted vacant and abandoned residential properties to fall into disrepair,” said Assemblywoman Helene E. Weinstein, Assembly Judiciary Committee Chair. “These properties are a blight on neighborhoods and bring down neighboring homeowners’ property values. I commend Attorney General Eric Schneiderman for proposing this bill that I am proud to sponsor with Senator Klein. I look forward to working with the Attorney General and Senator Klein to help protect our neighborhoods by identifying and ensuring maintenance of properties early on.”

This is the second time the three officials have teamed up to address the ongoing problems created for New Yorkers by the housing crash. In 2013, Senator Klein and Assemblywoman Weinstein shepherded through Attorney General Schneiderman’s bill, submitted jointly with the Judiciary, to address “shadow docket” foreclosures. The bill, signed into law by Governor Cuomo in July 2013, delivered relief to thousands of New York homeowners that faced foreclosure, but had been denied a fair opportunity to fight for their home in court.

The Schneiderman-Klein-Weinstein bill would address the problem of zombie properties in several ways:

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.

One of the new provisions of this year’s Abandoned Property Neighborhood Relief Act would direct penalties for noncompliance into a fund for local municipalities to support code enforcement and related efforts to address zombie properties within the municipality where the violations occurred. Another new provision would create an expedited foreclosure process for properties that are confirmed to be vacant.

The Abandoned Property Neighborhood Relief Act is one component of Attorney General Schneiderman’s broad strategy to help New York homeowners and communities recover from the foreclosure crisis. He successfully fought for a strong National Mortgage Settlement that delivered more than $2 billion in relief to New York families. He dedicated $100 million from the settlement to create the Homeowner Protection Program (HOPP), a network of free legal and housing counseling services that has served more than 40,000 families statewide.

Attorney General Schneiderman has also pursued relief for communities by directing funds from the National Mortgage Settlement to community “land banks,” which are nonprofit organizations that can acquire property that is tax delinquent, tax foreclosed, vacant, or abandoned and use it for a variety of purposes to counter neighborhood blight.

In June of 2013, Attorney General Schneiderman announced the Community Revitalization Initiative (CRI), which has provided $33 million in funding to land banks that are working at the local level across New York State to rebuild and revitalize their communities. In the first round of funding, which took place in October 2013, OAG disbursed $13 million to eight land banks. After passing legislation to double the maximum allowable number of land banks, Attorney General Schneiderman disbursed an additional $20 million in a second round of funding in October 2014.

“An abandoned, blighted property is not only an eyesore, but a potential danger for a community as well. This legislation offers a common sense approach to the issue of so-called ‘zombie properties,’ and I commend Attorney General Schneiderman, State Senator Klein and Assembly Member Weinstein for their efforts on this important issue. Property owners, including banks and lenders, must maintain the properties they are responsible for,” said Bronx Borough President Ruben Diaz Jr.

"Vacant, abandoned properties are scarring our communities and threatening the safety and security of our families," said Elbin Mena of the Harding Park Homeowners Association. "Because these homes are not properly maintained throughout the foreclosure process, they are a magnet for illegal activity, flooding, fires and a slew of other disasters. I commend Senator Klein, Attorney General Schneiderman and Assemblywoman Weinstein for their efforts to ensure homes in foreclosure are rightly cared for and their work on behalf of all homeowners and communities across New York State."