New law helps local officials find those responsible for ‘zombie properties’

Legislative Gazette photos by Emily Fego

Governor Andrew Cuomo has signed a new law (S.4190 /A.6976) requiring mortgage servicers to provide contact information so local governments can easily reach those responsible for maintaining vacant properties in their communities.

It is common for vacant properties to become engulfed in overgrown lawns and broken glass while the home itself deteriorates, occupied by animals and without any maintenance for years. 

Many local government officials have struggled to identify the mortgage servicer who is responsible for maintaining a vacant and abandoned property. 

This law helps local governments easily identify and contact mortgage servicers in order to enforce maintenance obligations on one- to four-family residential properties in foreclosure.

“By requiring this critical step during foreclosure proceedings, this legislation will empower municipalities to more effectively ensure that blighted properties are documented, tracked, and remediated quickly,” said Tim Kennedy, the bill’s prime sponsor in the state Senate.

Many of these unoccupied homes are remnants of the national housing crisis responsible for the foreclosure of thousands of New Yorkers’ homes over a decade ago. 

According to a 2011 report from the Office of the State Comptroller, Putnam County had the highest rate of foreclosure filings per 1,000 households in both 2009 and 2010. In 2009, the foreclosure filing rate was 15.4 percent in Putnam County, 9.1 percent above the statewide average at the time and 15.8 percent a year later, 10.3 percent above the statewide average the same year. 

Now, the economic stability of the state and the nation as a whole is largely unknown while the COVID-19 pandemic rages on. The purpose of the new law, which takes effect immediately, is to prevent more homes from becoming forgotten and blighted and force accountability for the already vacant homes. 

“Far too many beautiful and vibrant neighborhoods have suffered deterioration because some mortgage servicers neglect their obligations to maintain vacant properties,” said Monica Wallace, the bill’s primary sponsor in the Assembly. “This law will help local governments enforce their maintenance obligations and protect neighborhoods from unsightly and potentially dangerous conditions at zombie properties.”

In the justification of this legislation, the impacts of “zombie properties” or foreclosed homes that go without maintenance, goes beyond simply being an eyesore. Communities are put at risk due to potential increased crime and lower the local property values and burden on local governments. 

The New York State Abandoned Property Neighborhood Relief Act which was passed by the Assembly in 2016 addressed these issues though requiring a loan servicer to maintain the property. However the most recent legislation filled the gaps that went unaddressed in 2016 and will further require the mortgage servicer’s name and phone number for a foreclosure of a one to four family residential property. 

“Finding mortgage servicer information is often one of the most difficult tasks in the fight against zombie foreclosures,” said Kate Lockhart, vacant and abandoned property program director of the Western New York Law Center. “This new law provides servicer name and contact information in multiple publicly available documents throughout the foreclosure process, eliminating hours of tedious phone calls and extra work for already overwhelmed and underfunded municipalities.”

As of October 2020, the 1 in every 4,696 households in Putnam County is foreclosed. Although the foreclosure rate in the county and across the state has dropped since the housing crisis, the bones of these homes are still vacant and unkept. 

As for the future of foreclosures, according to Realtytrac it is unlikely that the foreclosure rate will quite reach what it was between 2006-2010. However, the U.S. Bureau of Labor Statistics reported that New York state’s seasonally adjusted unemployment rate for October 2020 is 9.6 percent, ranking third in highest unemployment rate in the nation. Hawaii at 14.3 percent adjusted unemployment ranks number one and Nevada ranks second with a 12 percent adjusted rate. 

Whether these unemployment rates increase will be influenced on future lockdown protocols, which in turn could impact the foreclosures on homes in the state. However, the governor has placed a moratorium on COVID-related foreclosures that will last until the new year. The fate of New Yorkers who are unable to afford their homes once the extension on the moratorium is up is unclear.