They dot the community scapes of Long Island -- homes abandoned during the foreclosure process, some boarded up, others used as dumps or vandalized.
Responsibility for a property has been a gray area in cases where the homeowner is gone and the lender has not taken control of the house until it "buys back" the property at auction. Who must cut the grass and clear the trash?
Starting April 14, the onus will be on banks and lenders -- even before they've taken ownership, before they buy back the house, before any title is recorded.
The Mortgage Foreclosure Law, signed by the governor in December, holds them liable as soon as the court passes down a judgment of foreclosure, which means the property can be sold at auction. They'll be charged with mowing and more until a deed with a new owner is recorded.
"This provides real protection for individuals who I think are victims of the mortgage fallout," said state Sen. Jeff Klein (D-Bronx), who sponsored the bill and on Tuesday stood in front of a Central Islip foreclosure with local leaders and nonprofits to highlight the upcoming change. "There are national studies and state studies that show property values do go down $7,500 to $15,000 per foreclosed home on a block.”
Technically, a lender with a foreclosure judgment still doesn't own the house. They take possession after the auction. But anything can happen between the foreclosure judgment and the auction. Sometimes, the lender and homeowner resolve things; other times, the homeowner files for bankruptcy the day before the auction.
Putting the onus on lenders before they’re considered the owners makes sense, said Bob Katz, executive vice president Mortgage Enterprise, a Roslyn Heights lender. After decades in the lending industry, Bob Katz has seen homes that have sold at fire sale prices because they’ve been ignored and wrecked.
“You’re going to be the owner pretty soon,” he said. “Why not protect what you have? ... My feeling is they made the loan in most cases and I think it’s to their benefit to keep the house in decent shape.”
State Sen. Brian Foley (D-Blue Point) said banks have argued that they're not liable for the way the properties look until the deed is recorded.
It can be months before title and deed changes on foreclosed homes are recorded by county offices, either because lenders wait before sending the information or government offices can’t keep up with filing the paperwork.
That makes it tough trying to figure out who to call about eyesores, community activists said.
"There are loopholes in the current law that this closes," he said. "Banks will have to take much more responsibility for these properties."
But will the new legal provision wash the Island of eyesores?
First, there's another unresolved, gray area. It often takes more than a year and sometimes two in this state before the foreclosure process leads to judgment of foreclosure.
It's a time span not covered by the new law, and nonprofit and public officials said troubled borrowers often flee when they get the first notice of foreclosure proceedings.
Second, even on cases where there's no doubt lenders are owners and they have responsibility, some don't look after the properties. Once lenders take back the houses at auctions, it's clear they must keep up the home, just like any other homeowner. Many hire real estate agents and maintenance companies to take care of this, but some Long Island agents said the budgets are often barely enough to cut grass a few times a year.
Klein said the new provisions would require lenders to fix up windows, roofs and more. If they don’t, he said, municipalities have the right to do it and send the bill to lenders.
Nancy Manfredonia, head of the Central Islip Civic Council, said she's not sure how much cleaning up the community will see as a result of the new law.
But it's another weapon for the nonprofit, which routinely surveys the community for abandoned properties and tells lender-owners to clean up, she said: "It will allow us, in the worse case scenario, to complain not just to the town but the state banking department.”
The Mortgage Foreclosure Law also gave renters in foreclosures more protection and expanded certain rights to all homeowners in the foreclosure process, not just subprime borrowers. Those provisions kicked in during January.