NY Considering Alternate Approach to Abandoned Homes

In an effort to tackle the issue of houses that have been abandoned by their owners before a lender has foreclosed on it, New York lawmakers will be considering a legislation that requires registry and upkeep provisions for the lender.  These “zombie properties” are much loathed by members of the community as they are often in dangerous states of repair and raise insurance rates while dropping property values.  As reported in the New York Times:

On Monday, Eric T. Schneiderman, New York’s attorney general, is expected to outline legislation that he hopes will force banks to take responsibility for zombie properties, providing some help to cities like Newburgh, where officials estimate 10 percent of all homes are in some stage of abandonment.

New York State has roughly 15,000 zombie homes and leads the nation in the time required to foreclose on a home, at almost three years, according to data from RealtyTrac, a company that tracks troubled properties.

The bill Mr. Schneiderman will be asking Albany lawmakers to embrace will make lenders responsible for homes soon after they are abandoned, requiring banks to register the properties in a central database and pay for their upkeep, according to government staff members briefed on the legislation but not authorized to speak on the record.

This will not be easy, in part because banks, homeowners and city officials often disagree on what constitutes abandonment. As a result, the attorney general plans to define the term, these people say. The legislation will propose that a house can be deemed abandoned if a bank has not received a mortgage payment after an as-yet-undetermined number of weeks; other conditions, like broken windows, could also be considered.

The bill would require banks to pay a fine for each day that the property is not in compliance with registration on upkeep. It would also require the banks to notify the homeowners of the right to stay in the home until the foreclosure is finalized by a judge.