April has been a busy month for New York State Attorney General Eric Schneiderman and his efforts to stem the growing plague of abandoned foreclosed homes ”” so-called zombie properties ”” that continue to haunt the housing markets of municipalities still struggling with the lingering specter of the recession and housing crisis.
“Years after the housing crash, abandoned foreclosed homes continue to be a blight on too many New York neighborhoods,” Schneiderman said in a statement.
In his second announcement this month on the issue and building off of similar legislation under the same name passed last year that failed to pass both the state Senate and Assembly, Schneiderman was joined by Senate Coalition Co-Leader Jeffrey D. Klein, D-Bronx/Westchester, and Assemblywoman Helene Weinstein, D-Brooklyn, in announcing the introduction of a new Abandoned Property Neighborhood Relief Act aimed at stemming the rising tide of zombie homes across New York.
According to data analyzed by the Office of the Attorney General from RealtyTrac, a California-based realty information company, zombie property foreclosures increased by almost 50 percent from 2013 to 2014, bringing the total number of abandoned foreclosure properties in New York state 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 percent between 2013 and 2014, bringing the total number to 3,525.
Statewide foreclosure trends from RealtyTrac show Orange County with the highest rates of foreclosure in the month of March, while in Westchester County the town of North Salem and its hamlet of Croton Falls are among the five county towns with the highest foreclosure rates in March in addition to Buchanan, Elmsford and Cortlandt Manor.
“Foreclosures is not a big problem at all, my problem is a little different ”” it”™s these zombie properties,” said Warren Lucas, North Salem town supervisor.
According to RealtyTrac a quarter of North Salem homes in active foreclosure are bank owned while the remainder are in pre-foreclosure.
Lucas said North Salem does not have a large amount of abandoned foreclosed properties, but of the few it has they have been neglected by the banks that own them with little progress made over the years.
“I have one over in Croton Falls and the person has been out for a couple of years and the bank has done nothing with the property,” he said. “I am on the phone with them quite frequently saying ”˜please mow the lawn, please rake the leaves.”™”
“We are trying to get the state to pass some legislation so we have the ability to go in and clean the property up, mow the lawn and get it on the tax bill.”
The town government cannot currently contract work to refresh the home on its own, but Lucas said legislation is being looked at in the coming months that might permit it to do so.
Schneiderman”™s Abandoned Property Neighborhood Relief Act includes “stiff penalties” for banks that fail to maintain properties in addition to several measures aimed at increasing responsibility for the properties and identifying ownership.
In addition, the bill takes aims to clarify some of the stigma and fear for those experiencing a foreclosure to prevent people fleeing prematurely from their home and leaving it to fall into disrepair.
“(The banks) send threatening letters to the homeowner, they push them to leave,” Newburgh Mayor Judy Kennedy said. “What I tell owners who have been in any foreclosure action, don”™t move, don”™t go anywhere ”” stay put.”
“They, by law, are actually still responsible for the property until the day that paper is filed with the county and registered under the bank”™s name,” she said. “As long as you are legally responsible stay put, stay in the home, you don”™t have to move to the very last minute, even if you are not paying your mortgage.”
According to RealtyTrac, 82 percent of Newburgh homes in active foreclosure are bank owned with 12 percent in auction and 5 percent in pre-foreclosure.
Schneiderman”™s proposed legislation attempts to address abandoned properties by requiring 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. Lenders and their servicers would be required to identify, secure and maintain vacant and abandoned properties and pay for their upkeep.
Of Newburgh”™s foreclosures, Kennedy estimates the city has about 200 city-owned buildings, 200 privately owned vacant buildings and about 200 bank-owned buildings in a city of approximately 10,500 housing units.
Like Lucas in North Salem, she pins the problem directly on “big banks,” with both municipal leaders mentioning Wells Fargo, Chase, Citibank and Bank of America.
“The bank does the foreclosure but doesn”™t finish, they don”™t file those papers with the county so it really doesn”™t belong to anybody at that moment, so we have this issue where they just sit there and deteriorate,” she said. “Drug users break in and use them, set fires in them; it just starts to pull the whole neighborhood down and then the next one goes, and the next one goes and it is almost like an epidemic.”
“I often wonder if the banks still know who owns them or if they can produce the documentation to show that they do with the way mortgages were being sold years ago,” Lucas said.
The expanded Abandoned Property Neighborhood Relief Act addresses the question of ownership by requiring mortgagees or their agents to electronically register zombie properties with a newly created statewide Vacant and Abandoned Property Registry to be established and maintained by the Office of the Attorney General. Banks that fail to register an abandoned property will be subject to civil penalties.
In Newburgh, the attorney general”™s proposal has been well received with the city council quickly approving a resolution to support the expanded legislation.
Kennedy isn”™t confident the number of zombie properties in Newburgh has decreased recently, but she is sure that increasing efforts and partnerships among the city, its Distressed Property Task Force and organizations like Habitat for Humanity, private developers and the Newburgh Community Land Bank in particular are pushing the city in the right direction.
“We have gotten a few properties up and running,” said Madeline Fletcher, director of the Newburgh Community Land Bank.
“That number has probably not taken a dramatic leap percentage wise, but in the last year the mechanism and initiatives necessary to get things in order have been put in place,” she said.
In just the last month or two, various interested parties have come forth either fully committed or willing to investigate the feasibility of working with 25 to 30 buildings of the land bank”™s buildings, roughly half of the distressed properties the group holds, she said.
Fletcher agrees that the large banks have been an impediment to progress, but she notes that Wells Fargo, one of the banks Kennedy specifically mentioned as well known to leave properties in limbo, recently reached out to the land bank and donated several properties.
“It has been a problem with no clear solution for a very long time,” she said. “This whole zombie concept of either bank-owned or in-process-for-closure properties has really been a drag on this area for quite a number years and the idea that now the state is becoming involved is really encouraging.”
