Valley Stream to receive $100,000 to combat zombie homes

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New York state was recently awarded a $3.2 billion settlement from Morgan Stanley after the firm’s scheme to market mortgage-backed securities contributed to the collapse of the housing market in 2008 and the ensuing recession. Ironically, the state is awarding millions of that settlement to local municipalities to clean up thousands of vacant and abandoned properties that have been dubbed “zombie homes,” many of which have been vacant since the housing crisis and Superstorm Sandy.

New York State Attorney General Eric Schneiderman announced last week that nearly $13 million in grants have been earmarked for 76 cities, towns and villages across the state to address the problem of vacant homes that are not maintained during prolonged foreclosure proceedings.

“Too many homeowners across New York are still struggling to rebuild their communities in the wake of the housing crisis caused by major banks,” Schneiderman said in a statement. “I’m proud that the funding obtained by my office’s settlement with Morgan Stanley will now help cities and towns across the state reverse the proliferation of zombie properties, which invite crime and threaten the value of surrounding homes. These grants will help rebuild, revitalize and stabilize communities across the state.”

Valley Stream is set to receive $100,000 from the settlement. “Obviously, we welcome any assistance to lessen the burden on our taxpayers that zombie homes present,” Mayor Ed Fare said. The number of vacant properties in the village, he said, fluctuates between 90 and 100.

Village Clerk Bob Barra told the Herald in August that Valley Stream requested $350,000 for code enforcement personnel, vehicles and computers, and is considering establishing a task force to handle cases of abandoned homes.

Village Treasurer Michael Fox said the money would likely be used to strengthen the village’s housing code enforcement and the continued monitoring of quality-of-life issues. He said the money would help track and moderate vacant properties in the village, and offset any additional costs incurred.

On the South Shore, the combined effects of the financial crisis and Sandy’s devastation left many families unable to pay their mortgages, local officials have said, and they eventually abandoned their properties, which were seized by banks or other lenders. In many cases, houses fell into disrepair as they awaited foreclosure, becoming zombie homes.

Municipalities with populations of at least 5,000 and at least 100 vacant and abandoned properties were invited to apply for the funds through a competitive application process. Among the other municipalities on Long Island that have been granted funds are the City of Long Beach, which was awarded nearly $100,000, the Town and Village of Hempstead, which is receiving $350,000, and the Village of Freeport, which is set to receive $152,000.

The money, Schneiderman said, will address vacancies and blight by bolstering a municipality’s capacity to enforce its housing code. It will help local governments track and monitor vacant properties, and be used for legal enforcement to ensure that banks and mortgage companies comply with local and state law — and pay for vacant properties’ upkeep.

In the Town of Hempstead, which has a population of 760,000, there are an estimated 1,286 vacant properties, according to Schneiderman’s office. In May, Town Supervisor Anthony Santino estimated that there were about 2,000 zombie homes in Nassau County, and said that Long Island municipalities spend about $3 million per year on the upkeep of those properties.

At that time, the town strengthened its efforts to combat the blight of vacated properties. The town board passed a law in May requiring banks to pay $25,000 deposits for upkeep of foreclosed properties in an effort to encourage them to sell the properties at reasonable prices and to maintain home values in the area. The average home in Elmont is valued at $357,200, according to real estate website Zillow. Homes in the neighboring village of Floral Park are nearly $200,000 higher.

“This money will help offset the cost to our taxpayers associated with the administration of programs we have implemented to combat zombie homes and businesses,” Santino said in a statement. “ ... We’re working hard to ensure that banks and property owners are good neighbors and properly maintain their properties.”

Steve Smirti contributed to this story.