First Niagara Financial Group’s mortgage division and another lender have signed on to help stem the problems caused by so-called “zombie properties,” agreeing to adopt a set of best practices promoted by the state to address vacant homes that are abandoned during foreclosures.
The Buffalo-based bank and Carrington Mortgage join M&T Bank Corp. and 10 other mortgage lenders – representing about 70 percent of New York’s mortgage market – in working with state officials to prevent the blight, safety hazards and damage to neighborhoods that observers say often result when no one takes responsibility for properties.
Banks are not legally required to maintain homes until the long foreclosure process is complete, but many homeowners simply give up fighting and leave their homes empty and neglected long before the lender takes possession. In turn, the state of disrepair reduces property values for neighbors and drives up costs for cities and taxpayers, when homes have to be maintained or even demolished at public expense.
“Ensuring that abandoned properties do not fall into extreme disrepair keeps neighborhoods lively and prevents taxpayers from carrying the expense,” Gov. Andrew Cuomo said in a release. “Mortgage companies can take simple steps and use best practices to help this problem, and I applaud the two businesses today who have committed to doing so.”
Under the best practices, the banks and mortgage firms agree to regularly inspect the properties behind delinquent loans to see if they’re empty and abandoned, and will take steps to secure and maintain them if necessary, including changing locks, boarding up windows and making critical repairs for safety.
The companies will also report those properties to a state registry that will be shared with local governments, while the state Department of Financial Services works with local officials and neighbors to bring any property concerns to the lenders’ attention.
“While we historically have had a low incidence of foreclosures, we fully support efforts to develop industry best practices to help combat the blight and economic damage caused by vacant properties,” said Scott Fisher, senior vice president and managing director of retail channels at First Niagara. “We are proud to support this newly developed, collaborative approach to taking care of the communities where we all live, work and raise our families.”
The best practices are supposed to be implemented by August. Besides the two local banks and Carrington, the other participating lenders are Wells Fargo & Co., Bank of America Corp., Citigroup, Ocwen Financial, Nationstar, PHH Mortgage, Green Tree Servicing, Astoria Bank, Bethpage Federal Credit Union and Ridgewood Savings Bank.