(New York, NY – Insurance News and Markets) -A comprehensive package of legislation pieces in New York designed to combat “zombie properties’” effects on neighborhoods. This legislation package also establishes a consumer bill of rights to help homeowners to keep their homes.
The package was part of the 2016 Legislative Session and imposes a pre-foreclosure duty on banks and servicers in order to maintain zombie homes. The legislation combats the blight of vacant and abandoned properties by expediting the rehabilitation, repair and improvement of these properties, and enabling the State to assist homeowners facing mortgage foreclosure.
“For many New Yorkers, homes are our single most important investment, but that investment can be undermined by the blight of neglected and abandoned properties,” Governor Cuomo said. “For each zombie home that we cure and for each that we prevent with this legislation, we are saving entire neighborhoods from the corrosive effect of blight and neglect. I thank my colleagues in the Assembly and Senate for seeing a crisis and helping to turn it into an opportunity for people to realize the great American Dream of homeownership.”
The legislation includes several provisions that will help prevent people from losing their homes and addresses the scope of unoccupied and ill-maintained properties, which based on voluntary reporting, is estimated to be over 6,000. Under the new law, reporting is now mandatory, and the number of abandoned homes is anticipated to be even higher.
The legislation includes measures to assist homeowners facing mortgage foreclosure, improve the efficiency and integrity of the mandatory settlement conferences, establish a pre-foreclosure duty to maintain on mortgagees, create an expedited foreclosure process for vacant and abandoned properties, create an electronic vacant property registry, and establish a Consumer Bill of Rights. Specifically, the legislation will make mandatory settlement conferences more effective, giving homeowners a better chance to fight the foreclosure; the consumer bill of rights will ensure that property owners know their rights in a foreclosure situation.
This legal package also creates the Community Restoration Fund, a tool for the State of New York Mortgage Agency to help homeowners who face foreclosure. The fund will purchase defaulted mortgage sand offer favorable mortgage modifications, to allow homeowners to stay in their homes. CRF will have the ability to forgive a portion of a loan’s principal and make the loan affordable in areas where home values have declined or where a homeowner has experienced a decrease in income.
The law also requires that banks and servicers take over maintenance of the property when they become aware of their vacant property. It requires that they continue to maintain and secur the property or face a fine of $500 per violation, per property, per day for failing to do so. It will also speed up the foreclosure process for vacant, abandoned properties to get these homes back on the market.
Source: New York State, Department of Financial Services.