The state of New York is taking its fight against zombies homes to the next level, as the state announced a series of new regulations for mortgage lenders and servicers that aim to hold the companies “accountable” for the maintenance of abandoned foreclosures.
Earlier this year, New York Gov. Andrew Cuomo signed what the state called “sweeping” legislation to reform the state’s foreclosure process and address the state’s issues with zombie homes.
The state’s new laws impose a pre-foreclosure duty on banks and servicers to maintain zombie homes, creates an electronic registry of abandoned properties, and expedites foreclosure for vacant and abandoned properties to get them back on the market, among other requirements.
Cuomo’s office announced Tuesday what lenders and servicers will be required to do under the new laws and what punishment the companies will face if they don’t comply.
According to Cuomo’s office, the New York Department of Financial Services proposed a new regulation that mandates lenders and mortgage services report vacant and abandoned properties, in accordance with the state’s new laws.
Under the state’s new laws, lenders and mortgage servicers must complete an inspection of a property subject to delinquency within 90 days and must secure and maintain the property where the bank or servicer has a reasonable basis to believe that the property is vacant and abandoned, the NYDFS said.
Additionally, lenders and mortgage servicers will now be required to report all vacant and abandoned properties to the NYDSFS and submit quarterly reports detailing their efforts to secure and maintain the properties and any foreclosure proceedings.
According to the announcement, if the NYDFS determines that an abandoned or vacant house not “properly maintained” by the lender or mortgage servicer, the NYDFS will “exercise its authority” to hold the bank or mortgage servicer “accountable.”
According to the NYDFS, that means that lenders and servicers will face a civil penalty of $500 per day per property for violations of the new regulations.
“Under Governor Cuomo’s leadership, New York passed groundbreaking ‘zombie’ legislation that will provide real relief to communities all across the state,” NYDFS Superintendent Maria Vullo said. “DFS will take necessary and appropriate action to make sure this law is followed and those responsible are held accountable.”
These new laws and regulations aren’t the only steps undertaken recently by New York in its fight against zombie homes and neighborhood blight.
In July, New York Attorney General Eric Schneiderman announced a new program that will help New York’s city governments track and address zombie homes in their respective cities.
According to Schneiderman’s office, the Zombie Remediation and Prevention Initiative will provide $13 million in grants to local governments to fight zombie homes.
And earlier in July, New York City announced plans to launch a “first of its kind” program to buy a number of delinquent loans from the Federal Housing Administration as part of an effort to keep struggling homeowners from losing their homes to foreclosure.
“Abandoned homes are a blight on New York communities, and the longer they are allowed to fall in disrepair, the lower property values for entire neighborhoods are dragged down,” Cuomo said of the new regulation. “This regulation is another step toward combatting the scourge of vacant and neglected properties, and will ensure that banks and mortgage servicers are held fully accountable for complying with their obligations under this new law.”