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‘Zombie’ Homes Without Owners Forgotten By Banks

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your home listical graphic Zombie Homes Without Owners Forgotten By Banks

NEW YORK (CBSNewYork) — Homes left in limbo without owners and forgotten by banks, known as “zombie houses,” are causing serious issues for neighbors in the Bronx and the suburbs, CBS 2’s Lou Young reported.

The rundown, ramshackle wrecks are the physical remnants of the sub-prime mortgage bubble that neighbors say is a problem, but no one’s business.

“Something has to be done. I’m afraid of a fire!” a neighbor to one of the zombie properties, Bill Campbell, told CBS 2.

Real estate attorney David Babel’s client, William Palmer, is tied to a zombie house on 9th Avenue in the Harding Park section of the Bronx.

“If it’s a zombie property, it’s a twilight zone,” Babel said.

Palmer used to own it—and on paper he still does—except in reality, the home is not his.

“I surrendered the house to the bankruptcy court,” Palmer said.

When Palmer was asked who owned the home, he told CBS 2, “I have no idea. I thought the bank did.”

In 2006, a local finance company made the initial loan of $360,000 with the home as collateral. The finance company involved then sold the mortgage to a major New York bank which bundled it and sold it to a finance company in West Palm Beach, Fla. Then, the bubble burst and Palmer lost the house.

It became a “zombie” due to the fact that the bank never fully foreclosed on the property.

“They stop short of foreclosure because they don’t want to be responsible for the maintenance of the property, and that really causes havoc on a community,” Sen. Jeffrey Klein said.

Klein insists this is no isolated case; other zombie houses, like a home in South Nyack with a festering, abandoned swimming pool, languish with no clear ownership.

The town recently mowed down the weeds and fenced in the swimming pool on its own.

Klein and fellow Sen. David Carlucci are sponsoring a bill to make mortgage holders responsible earlier in the foreclosure process.

Some supporters of the bill, like Babel, told CBS 2 they think that could help.

“The bank is in the position to decide if they wish to go through foreclosure.  Do they wish to stand pat and let it deteriorate?” Babel said.

The New York Bankers’ Association opposes the bill, but recognized the problem in a statement.

“NYBA supports a bill that would create expedited foreclosures for properties that are vacant and abandoned,” the statement reads.

By some estimates, there are as many as 15,000 zombie properties in New York state.

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