Tuesday, February 11, 2014

AG wants to hold banks accountable for condition of properties

From the NY Times:

On Monday, Eric T. Schneiderman, New York’s attorney general, is expected to outline legislation that he hopes will force banks to take responsibility for zombie properties, providing some help to cities like Newburgh, where officials estimate 10 percent of all homes are in some stage of abandonment.

New York State has roughly 15,000 zombie homes and leads the nation in the time required to foreclose on a home, at almost three years, according to data from RealtyTrac, a company that tracks troubled properties.

The bill Mr. Schneiderman will be asking Albany lawmakers to embrace will make lenders responsible for homes soon after they are abandoned, requiring banks to register the properties in a central database and pay for their upkeep, according to government staff members briefed on the legislation but not authorized to speak on the record.

This will not be easy, in part because banks, homeowners and city officials often disagree on what constitutes abandonment. As a result, the attorney general plans to define the term, these people say. The legislation will propose that a house can be deemed abandoned if a bank has not received a mortgage payment after an as-yet-undetermined number of weeks; other conditions, like broken windows, could also be considered.

“If a property is vacant and deteriorating, a bank has a duty to maintain it and move swiftly to resolve the foreclosure case,” Mr. Schneiderman is expected to say Monday, when he plans to detail the legislation during a speech to the New York State Conference of Mayors and Municipal Officials. His remarks were reviewed in advance by The New York Times.

If the bill passes, banks that fail to register an abandoned house will be subject to a fine, possibly $1,000 a day for each property that is not in compliance. Mr. Schneiderman’s bill also will propose that banks be forced to notify homeowners of their right to remain in a property until a judge has formally signed off on the foreclosure.

Mr. Schneiderman is also expected to propose a separate bill that would double the number of land banks in New York State to 20, from 10. Land banks are state-funded nonprofit organizations that pay to rehabilitate vacant properties.


Anonymous said...

They should be held accountable just like landlords. You own the house, you should maintain it.

Joe Moretti said...

Like the Geico commercial with the little kids. IT'S NOT COMPLICATED.

The powers to be make it complicated. This should have been on the books and enforced years ago.

Anonymous said...

This is a no brainer!

Anonymous said...

Not so fast there, QC'ers.

If you don't have clear rules this becomes a disaster. If the bank only holds a lien and not ownership (i.e. title), then the owner should alone be responsible. Otherwise, you have (a) the bank not getting interest for its loan, (b) paying for repairs, (c) unable to sell it.

The banks will just respond by making it harder to get a loan if you make the banks responsible for repairs as soon as the borrower defaults.

I think this is also an incentive for banks to demolish properties that would require a lot of investment to make liveable. In many (most) areas of Queens, an empty lot is more valuable that one with a small/old house on it.

Anonymous said...

Wells Fargo holds the mortgage on the buildings which has been abandoned by the straw buyers who purchased the buildings as 2 family homes which Group Kappa Corp sold, they have been convicted for mortgage fraud. The buildings are Rent Regulated and now HPD provides emergency services to residents. There is no super or property manager for the complex and Real estates are still attempting to sell properties as 2 family homes. The violation on the property are enormous. The Bank takes no responsibility for the property. The Banks should be held accountable.

J said...

$1000 fine for these banks is like if one of us lost a penny.

has it been only 6 years since we bailed out these financial crackheads?And as it been the same amount of time that change you can believe in has been instilled in DC that was suppose to hold these banks accountable for their corrupt practices?

its time to start dropping indictments,Eric.If not,then maybe we should start squatting in the homes and exercise our second amendment rights to protect them.The seeds have already been planted thanks to half-assed charges like this.Now let the chickens come home to roost.