What is being done about the foreclosure crisis in New York?
Although the real estate market in the Capital Region and elsewhere in the state of New York has been steadily improving, lingering vestiges of the 2008 mortgage crisis remains in the form of Zombie Homes - houses in foreclosure that have been vacated by their owners.
Last month, Gov. Cuomo signed a law that requires lenders to maintain abandoned houses before foreclosure. While vacant homes have blighted many communities across the state, Suffolk County has been particularly hard hit, leading the state with more than 700 zombie homes. To emphasize that this is a statewide epidemic, however, the governor also had signing ceremonies in Manhattan, and suburban Syracuse.
“I think they’re called zombies because the nightmare of the mortgage meltdown continues,” Cuomo said at a ceremony in Hauppauge where he signed the legislation.
Previously, the law merely required lenders to take responsibility for the property after a foreclosure judgment. Given the fact that a foreclosure proceeding can take 6 months, the mortgage crisis littered the state with vacant homes. Now, lenders, banks and mortgage servicers may be subject to fines up to $500 per day for failing to maintain abandoned properties. Under the law, local municipalities and the state Department of Financial Services will have authority to impose the fines.
"The banks have to step up and recognize their responsibility, and if they don't do it they're going to be fined," Cuomo said.
The law also sets up a statewide electronic registry of abandoned homes as well as a hotline where neighbors can report vacated dwellings. In addition the law is intended to expedite foreclosure and also create a consumers bill of rights for foreclosure cases. Ultimately, the law is designed to address property value depreciation in neighborhoods across the state.
"When they allow an abandoned property like this to remain abandoned, it does not just devalue this property, it devalues properties next to it and then the entire community," said the governor.
While addressing the zombie home epidemic is long overdue, there are alternatives to foreclosure, such as loss mitigation and short sales. Given the burdens this law will place on lenders to incur additional costs and potential fines, it is in their best interest to pursue these alternatives whenever possible. The experienced real estate attorneys at Ianniello Andersen, P.C. routinely handle loss mitigation matters throughout the eastern upstate New York region.