Several mortgage lenders in New York state have agreed to follow a set of best practices for residential properties vacated or abandoned by owners in default on their mortgages and to report those “zombie” dwellings to a newly created state registry.
Gov. Andrew Cuomo recently announced the agreement reached by the state Department of Financial Services with 11 banks, mortgage companies and credit unions that he said represent nearly 70 percent of the New York mortgage market. It is part of a broader effort by state officials to eliminate the growing neighborhood blight of vacant properties whose delinquent owners faced foreclosure. There were about 16,700 zombie properties statewide in 2014, according to the state attorney general”™s office.
Banks and mortgage companies that to date have agreed to adopt the best practices are Wells Fargo, Bank of America, Citi Mortgage, Ocwen, Nationstar, PHH, Green Tree Servicing, Astoria Bank, Bethpage Federal Credit Union, M&T Bank and Ridgewood Savings Bank.
Expected to be implemented by August, the best practices apply to first-lien mortgages on residential homes.
Lenders agreed to conduct an exterior inspection of a property within 60 days of delinquency to determine vacancy and abandonment, and every 30 days thereafter.
If the property is found to be vacant and abandoned, the lender will secure each unit by changing the lock, replacing or boarding up windows, posting the property with contact information, and eliminating other safety hazards. The company will monitor the property”™s condition to ensure it remains secure and complies with provisions of the New York maintenance code.
Lenders will notify the Department of Financial Services of any new properties to be added to the state”™s registry of vacant and abandoned properties, and the agency will share the information with local officials statewide.
The financial services department will accept complaints from neighbors or local officials about vacant properties. The agency”™s Mortgage Assistance Unit will work with the applicable bank or mortgage company to resolve issues raised by complainants.
Complaints can be submitted to the department at dfs.ny.gov/consumer/fileacomplaint.htm.
Under existing law, property owners are responsible for the maintenance of their properties. Banks and mortgage companies are not required to maintain vacant and abandoned properties until they receive a judgment of foreclosure, often three years or more after filing for foreclosure in court.
Cuomo when announcing the best practices program said it “should serve as a model for protecting neighborhoods from the dangers of vacant and abandoned properties in the future.”
New York Superintendent of Financial Services Benjamin M. Lawsky said the best practices are “common sense actions” that are “an immediate and vital part of repairing that damage as we continue to pursue additional legislative reforms.” The Abandoned Property Neighborhood Relief Act has been introduced in the current session of the state Legislature.
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