A New Effort in Albany to Put Lenders in Charge of Abandoned Properties

February 10, 2014
The New York Times 
mortgage lending news
Thousands of zombie homes (about 15,000) across New York State sit abandoned by their owners, leaving the low-value properties to fall apart or burn down as lenders take years to wrap up foreclosure paperwork. New York State Attorney General Eric T. Schneiderman is introducing legislation to force banks to take responsibility for the abandoned homes.

The proposal would make lenders responsible for homes soon after they are abandoned, requiring them to register the properties in a central database and foot the bill to maintain them. It likely will define "abandonment" as banks, homeowners, and city officials often disagree on what the term means; and the measure also is likely to say a home is considered abandoned if a bank has not received a mortgage payment after an as-yet-undetermined number of weeks. Other conditions like broken windows could factor into the definition as well.

If the bill passes, banks that fail to register an abandoned house will be subject to a fine, possibly $1,000 a day for each property that is not in compliance, and the bill likely will require banks to notify homeowners of their right to remain in a property until a judge has formally signed off on the foreclosure.

Schneiderman also is expected to propose a separate bill to increase the number of land banks, which pay to rehabilitate vacant properties, in the state to 20 from 10.

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