Gov. Cuomo Signs ‘Zombie’ Property Bill
John Jordan | June 23, 2016
ALBANY—Gov. Andrew Cuomo signed into law the “zombie property” bill on June 23rd. The legislation, which passed the State Legislature, is geared to combating the blight of vacant and abandoned properties throughout the state providing further assistance to those in danger of losing their homes, and in some cases expediting the foreclosure process.
Gov. Cuomo signed the legislation into law at events in Syracuse, Manhattan and Long Island. The legislation seeks to reduce “zombie properties” statewide by expediting the rehabilitation, repair and improvement of these properties, and enabling the state to assist homeowners facing mortgage foreclosure. NYSAR officials tell Real Estate In-Depth that the statute will become effective 180 days after it gets signed into law, which puts the effective date at Dec. 20, 2016.
“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,” Gov. 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.”
Senate Democratic Leader Andrea Stewart-Cousins said of the bill being signed into law, “Revitalizing and strengthening our communities is a longstanding priority of both the Senate Democrats and Governor Cuomo. For too long the fabric of our communities have been weakened by these zombie properties and today we can begin moving forward to make sure that our neighborhoods are protected. Stronger neighborhoods help build stronger communities”
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 more than 6,000, according to state officials. 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, improving the efficiency and integrity of the mandatory settlement conferences, establishing a pre-foreclosure duty to maintain properties on mortgagees, create an expedited foreclosure process for vacant and abandoned properties, the creation of an electronic vacant property registry, and the establishment of a Consumer Bill of Rights. The new law will also create the Community Restoration Fund CRF, a new tool for the State of New York Mortgage Agency SONYMA to assist homeowners facing mortgage foreclosure. CRF will purchase defaulted mortgage notes from other lenders and offer favorable mortgage modifications to keep homeowners in their residences. 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.
Some of the key provisions of the new law include imposing a pre-foreclosure duty on banks and servicers to maintain vacant and abandoned properties: Previously, a bank or mortgagee had the responsibility of maintaining a vacant property once a judgment of foreclosure and sale was obtained, creating zombie properties and blight in communities. The new law places the maintenance obligation on a mortgagee when the mortgagee becomes or should have become aware of the vacancy. Under this law, the bank has a duty to maintain and secure a residential real property where there is a reasonable basis to believe it is vacant and abandoned, and faces civil penalties up to $500 per violation, per property, per day for failing to do so.
The legislation offers plaintiffs an option for an expedited foreclosure process on bonafide vacant and abandoned properties that homeowners no longer want. To initiate this process, plaintiffs would make an application for an order to show cause upon notice seeking entry of judgment of foreclosure and sale on the grounds that the property is vacant and abandoned.
The legislation requires a foreclosing party to move to auction within 90 days of obtaining a foreclosure judgment. In addition, a foreclosing party would be required to take action to ensure that the property is reoccupied within 180 days of taking title.
In cases where homes are vacant, CRF will offer a mechanism to expeditiously complete a foreclosure and work with land banks, Community Development Financial Institutions, and other local nonprofits to rehabilitate properties and resell them to new buyers, state officials noted.
Under Gov. Cuomo’s budget, the state has earmarked $100 million in available funding to help new homebuyers purchase and renovate “zombie” properties and support existing low- and middle-income homeowners with major repairs and renovations. Funding is available through the New York State Homes and Community Renewal to establish the new Neighborhood Revitalization Program and provide grants for not-for-profit organizations and municipalities throughout the state to rehabilitate, repair and improve homes.
Photo Caption:
Gov. Cuomo signed the legislation into law at events in Syracuse, Manhattan and Long Island.
Editor, Real Estate In-Depth