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Hempstead wants fee from banks to maintain foreclosed homes

A new law proposed by the Hempstead Town Board would charge banks a $25,000 upfront fee on foreclosures to try to prevent abandoned homes from slipping into disrepair.

Board members could vote Tuesday on the measure that would leave cleanup and maintenance costs with the banks on every home foreclosure, rather than waiting for those costs to be reimbursed through a homeowner’s property tax payments.

Hempstead Town Supervisor Anthony Santino said the new law would allow the town to receive the $25,000 deposit up front at the start of the foreclosure process. He said this would give banks the incentive to maintain or sell homes that are foreclosed. So-called zombie homes under foreclosure that have been neglected and abandoned have been a scourge to neighborhoods, Santino said.

If passed, the law would be one of the strongest penalties on Long Island and the first to require banks to put money down up front.

A Newsday/News 12 investigation last year found that Long Island municipalities spent at least $2.3 million in 2014 to clean, board up and demolish vacant structures, many of them zombie houses.

Most towns and villages add the cost of cleanups and demolitions to property tax bills, which typically are paid by banks if those homes are in foreclosure, the series showed. Some municipalities also have established vacant house registries and fined property owners or managers if they fail to register their properties.

Hempstead’s proposed law would up the ante.

“It’s time for banks to put people ahead of profits and be better neighbors. Especially on properties for which they have foreclosed,” Santino said.

The new law will be heard during a public hearing during Tuesday’s town board meeting. If passed, banks would be required to post either cash, a cash bond or a letter of credit to secure the property so the town could keep the home within Hempstead Town building codes.

The security fee would cover landscaping of front and back lawns, graffiti removal, securing pools, windows and doors and garbage removal.

Banks that do not provide the security deposit would be fined between $500 to $15,000 per day. The town could also charge additional fees and ask banks to “replenish” the security deposit to cover additional costs and demolition.

Santino and council members Gary Hudes, Erin King Sweeney and Anthony D’Esposito stood in front of a dilapidated home on Twisted Lane in Wantagh that has been under foreclosure for eight years in making the announcement about the proposed law.

The home is undergoing asbestos removal and is subject for demolition. The town will seek reimbursement for the costs.

Barbara Bogstead said she has lived next to the boarded-up home on Twisted Lane.

“It’s been like living eight years next to raccoon-ville,” she said.

With Carl MacGowan

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