Mortgage companies agree on zombie plan

Governor Cuomo and 11 banks and mortgage companies have reached an agreement to adopt a set of “best practices” to help combat so called “zombie properties”. Under the agreement the properties will be regularly inspected to determine if they are vacant and abandoned, and to make sure they are safe and properly maintained.

In addition the State Department of Financial Services will develop a registry for those properties that will be shared with local governments. Together they can address and escalate concerns about maintenance with the bank or Mortgage Company services the loan on the property.

Vacant and abandoned properties are a significant problem in Nassau County, causing blight and safety hazards, and creating significant taxpayer expenses. A protracted foreclosure process exacerbates this issue and the damage caused by the financial crisis. Under existing law, property owners are responsible for the maintenance of their properties and, thus, banks and mortgage companies are not required to maintain vacant and abandoned properties until they receive a judgment of foreclosure, often three years or more after filing for foreclosure. During this limbo period, some properties may fall into disrepair, and worsen blight and safety issues.

Benjamin M. Lawsky, Superintendent of Financial Services, said: “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. These common sense actions are an immediate and vital part of repairing that damage as we continue to pursue additional legislative reforms.

The banks, credit unions, and mortgage companies that are adopting these best practices, which represent nearly 70 percent of the New York market, are:

Wells Fargo

Bank of America

Citi Mortgage

Ocwen

Nationstar

PHH

Green Tree Servicing

Astoria Bank

Bethpage Federal Credit Union

M&T Bank

Ridgewood Savings Bank