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Two more mortgage banks agree to maintain 'zombie' homes during foreclosure process

An abandoned house in Brentwood on Dec. 18,

An abandoned house in Brentwood on Dec. 18, 2014. Credit: Chuck Fadely

The state has persuaded two more mortgage companies to agree to maintain foreclosed homes that have been abandoned in order to prevent the homes from falling into disrepair.

First Niagara Bank, based in Buffalo, and Carrington Mortgage Services, of Greenwich, Connecticut, have agreed to adopt a set of "best practices" in caring for the properties, which are known as "zombie" homes.

Long Island leads the state in the number of zombie homes with almost 4,300 as of last month, according to RealtyTrac, a California company that analyzes snapshots of real estate information. In addition, Suffolk County has the fourth highest number of these homes in the nation, while Nassau holds eighth place.

In a series of stories published in March after a yearlong investigation, Newsday and News 12 Long Island revealed that Long Island municipalities in 2014 spent more than $3.2 million to maintain vacant homes that had fallen into disrepair and that zombie houses have cost Long Island homeowners at least $295 million in depreciated home values.

Homes in foreclosure in New York lose 26 percent of their market value when they become abandoned, going from an average of $389,451 to $287,541, according to RealtyTrac. The loss is the highest among the 44 states studied by the company.Under state law, property owners are responsible for maintenance, and mortgage lenders have said that they can't do much with a zombie home because they don't have title to the property until the completion of the foreclosure process -- which averaged 1,475 days this year, the longest in the nation, according to RealtyTrac.

First Niagara and Carrington Mortgage join 11 other financial institutions that in May also agreed to maintain zombie properties in a deal made with the state's department of financial services. The other lenders 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.

The 13 lenders represent about 70 percent of the New York market.

"Ensuring abandoned properties do not fall into disrepair not only protects neighborhoods from blight, but also shields homeowners from having to contend with the falling property values, public safety issues and increased taxpayer costs associated with having these zombie properties in their community," Gov. Andrew M. Cuomo said in a statement.

Among the actions that would have to be taken under the agreement is securing the property by changing locks and boarding up windows, checking on the property every 30 days and making sure the property is maintained according to the state's maintenance code.

The best practices are expected to be implemented by August.

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