ALBANY, N.Y. (CBSNewYork/AP) — New York regulators said Monday that 11 lenders have agreed to monitor and maintain vacant properties in an effort to protect them and combat neighborhood blight.
The banks, mortgage companies and credit unions represent nearly 70 percent of the New York market and will adopt practices to limit the damage from so-called “zombie properties,” according to the Department of Financial Services. They agreed to best practices that include checking within 60 days any residential properties that are delinquent on loans to begin to determine if they are abandoned, the department said.
The 11 lenders are Wells Fargo, Bank of America, Citi Mortgage, Ocwen, Nationstar, PHH, Green Tree Servicing, Astoria Bank, Bethpage Federal Credit Union, M&T Bank and Ridgewood Savings Bank.
“The wave of zombie properties that arose in the wake of the financial crisis harms local communities and threatens the long-term health of the mortgage market,” department Superintendent Ben Lawsky said. Many homeowners defaulted on mortgages in the aftermath of the 2008 national financial crisis when the housing bubble burst. “These common sense actions are an immediate and vital part of repairing that damage as we continue to pursue additional legislative reforms,” he said.
After the initial external inspection within 60 days, the lenders are to check the property every 25 to 35 days. If they determine it’s abandoned, they will secure it by posting a notice with their contact information, change at least one door lock, board up any broken windows and doors and remove nuisance features and fix significant safety issues. Properties will be put on a state list to be shared with municipal authorities.
The determination of abandonment will be based on at least three consecutive inspections where there’s no evidence of occupancy and the property is not being maintained.
“Zombie properties can bring down the economic health and safety of entire neighborhoods – but by working together we are taking steps to help strengthen and repair local communities,” Gov. Andrew Cuomo said in a statement. “We commend these companies for working with us to address this problem.”
State Attorney General Eric Schneiderman, who proposed legislation to require lenders take those and other steps, noted recently that zombie foreclosures increased 50 percent from 2013 to 2014, bringing the total statewide to more than 16,700. He said Monday that they burden communities with maintenance costs, lowered property values and crime.
The bill has been introduced in the state Senate and Assembly. It would ensure homeowners delinquent on mortgage payments are notified early that they can stay legally in their residences until ordered out by a court. It would also necessitate lenders to identify, secure and maintain properties earlier than currently required.
The Department of Financial Services said the 11 lenders have agreed to the practices for delinquent properties that should start by August.
Wells Fargo spokesman Jim Hines said the bank supports efforts aimed at protecting properties nationwide. The best practices are consistent with the bank’s longstanding approach to property preservation, he said.
The department said it will take complaints from neighbors or local officials about vacant properties.
(TM and © Copyright 2015 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2015 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)