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Assembly passes bill requiring banks to maintain ‘zombie’ houses

The State Assembly has passed a bill intended to crack down on zombie homes by forcing banks to maintain vacant houses before they are foreclosed.

The Assembly voted 116-22 on Tuesday to approve the measure, which would establish a statewide registry of abandoned homes and require banks and loan servicing companies to report vacant houses to the state. A companion bill in the Senate is in committee.

Officials on Long Island and in economically depressed regions upstate have said their communities are plagued by vacant homes that attract squatters, drug dealers and vermin.

Supporters of the bill say it would shift the burden of maintaining abandoned homes from cash-strapped municipalities to lenders and mortgage servicers.

A Newsday/News12 Long Island investigation last year found that Long Island municipalities spent at least $2.3 million in 2014 to tear down, board up and clean blighted houses.

In Hempstead, the town board voted unanimously Tuesday to require banks and lenders to post a $25,000 security deposit each time a home in the town goes into foreclosure as means of funding upkeep and repairs. Other municipalities recoup cleanup costs by adding them to property tax bills.

State Attorney General Eric T. Schneiderman said in a statement Tuesday that his office has counted 16,701 vacant, foreclosed homes, known as zombie houses, throughout the state.

“These abandoned homes drag down property values, burden local code enforcement and threaten the safety of the neighboring communities,” Schneiderman said.

Backers of the Assembly bill lauded its passage. Current state law requires banks to maintain vacant properties only after obtaining a judgment of foreclosure.

“Long Islanders and residents across New York need this kind of leadership in Albany to take action to solve the ‘zombie property’ crisis,” Walter Barrientos, Long Island coordinator of citizen advocacy group Make the Road New York, said in a statement. “The time to take action is now.”

State Sen. Jeff Klein (D-Bronx), the bill’s primary Senate sponsor, said in a statement that zombie homes statewide cause “millions of dollars in property devaluation.

“We must hold banks accountable for decaying, abandoned properties stuck in the legal limbo of foreclosure and I look forward to the Senate taking action on this important issue,” Klein said.

The Assembly bill would also establish special courts to resolve foreclosure cases more quickly. New York foreclosures are among the longest in the nation.

But Assemb. Michael Fitzpatrick (R-St. James), who voted against the bill, said he was not convinced foreclosures would be completed faster. He said New York foreclosures average about 270 days.

“The bill does not expedite that process. Just because there’s a bill does not mean it solves a problem or moves things along,” he said.

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