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Zombie house legislation passed by state welcomed on LI

Abandoned homes, like this one in Levittown, seen

Abandoned homes, like this one in Levittown, seen on Oct. 2, 2014, are targeted in the state's new zombie house legislation, passed in Albany on Saturday, June 18, 2016. Credit: Chuck Fadely

Local officials on Sunday hailed the passage of state zombie house legislation that they said will help Long Island municipalities better grapple with thousands of vacant and foreclosed homes that attract vandals and vermin, and lower neighboring property values.

The bill, passed early Saturday morning amid a flurry of last-minute voting in Albany, establishes a statewide zombie house registry, creates a toll-free number for residents to report eyesores, and imposes fines on banks that fail to maintain homes in the foreclosure process.

In a nod to the mortgage industry, which complained that New York’s foreclosure proceedings are among the longest in the country, the bill expedites those cases in state courts.

Long Island municipalities have struggled in recent years to deal with thousands of homes left vacant in the wake of the 2008 housing market crash. The problem also has beset sections of New York City and upstate cities including Buffalo.

A Newsday/News 12 Long Island investigation last year found that Long Island towns, villages and cities spent at least $2.3 million in 2014 to clean, board up or demolish derelict houses, many of them zombie homes — those in the foreclosure process where the owner has abandoned the property but banks don’t yet have legal ownership.

In Brookhaven, where officials have estimated the town has as many as 800 zombie houses, Supervisor Edward P. Romaine said the state legislation could bring some relief.

“Anything that forces banks to clean up their property, that establishes a state registry, that speeds up foreclosures is a good thing,” he said Sunday. “We want to get through this problem and back to normal real estate conditions, which we had before 2008.”

Islip Town Supervisor Angie Carpenter said in an email that she was “grateful” to state lawmakers “for helping with this issue that is affecting all our municipalities and has negatively impacted the quality of life for all our residents and taxpayers.”

The bill allows municipalities and the state Department of Financial Services to take action against banks and mortgage servicers that fail to maintain vacant homes. Violators can be fined up to $500 per day for each property they don’t maintain.

“Finally, banks will be responsible to maintain zombie properties that have caused property value devaluation across our state,” state Sen. Jeffrey Klein (D-Bronx) said in a statement. A report released last week by Klein and state Sen. Tom Croci (R-Sayville) found at least 119 suspected foreclosed homes in Croci’s South Shore district, adding that neighboring homes lose an average $5,000 in property value.

Banks found to be acting in bad faith during foreclosure proceedings, such as by failing to produce required documents, may be fined up to $25,000 under the new law.

The provisions of the bill are modeled on legislation introduced each of the past several years by Attorney General Eric T. Schneiderman, who had called for a state registry and greater accountability for banks.

He called passage of the bill “a major victory for New Yorkers . . . as it will give regulators and law enforcement the tools they need to revitalize neighborhoods that have been devastated by the proliferation of zombie homes.”

Romaine said he still had questions about details of the bill, such as how it will be enforced, where fine revenue will go and how much staff will be assigned to cracking down on banks.

But he said the bill sponsors apparently had “copied a lot of ideas from municipalities like Brookhaven,” which established its own abandoned house registry almost three years ago. Hempstead Town recently imposed stiff fees for banks when they foreclose on homes.

“They know from local government what works and what doesn’t,” Romaine said.

State’s new zombie house legislation

  • Requires banks to maintain abandoned properties during pre-foreclosure proceedings. Current state law requires banks to care for homes only after a court notice of foreclosure.
  • Expedites foreclosure proceedings and improves the “efficiency and integrity” of foreclosure settlement conferences.
  • Creates a toll-free hotline to report suspected vacant properties.
  • Establishes an electronic database of abandoned properties.
  • Establishes a consumer bill of rights for property owners in foreclosure proceedings.

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