There is nothing like hitting lenders where it hurts – the bottom line – to focus their attention on zombie homes dragging down neighborhoods.
Thanks to state legislation, lenders now face up to a $500-a-day fine imposed by municipalities for each zombie home. Even at a big bank that will eventually add up to real money.
A zombie home is one in which the homeowner has quit paying the mortgage and abandoned the property, but that the lender has not foreclosed on because it does not want to be responsible for upkeep. These homes often fall into disrepair and become examples of demolition by neglect.
Lackawanna, plagued by some 70 zombie homes, is the latest municipality to take steps to force lenders to maintain properties using the 2016 Foreclosure Relief Act. The law requires lenders to maintain and secure a residential property if there is reason to believe it is vacant and abandoned.
One or two such zombie homes can weaken property values in an entire neighborhood.
Assemblyman Michael P. Kearns, D-Buffalo, has taken to “shaming” banks. In an October 2016 Another Voice column he said, “many banks were not being good neighbors by neglecting foreclosed homes and allowing them to become blighted or zombie homes.”
In a story in The News about Lackawanna’s action, 79 Warsaw St. was used as an example. The owner was unable to make the payments, according to Fred K. Heinle, Lackawanna’s director of development. Foreclosure proceedings began in 2014 against the property owner by lender Ditech Financial. The real estate website Zillow.com indicates the property is listed for sale at $43,500, but efforts to sell the property have fallen flat. Meanwhile, the property incurred numerous citations for code violations.
Kearns told The News that despite reasonable offers, Ditech continued to hang on to the property. Lackawanna plans to impose the $500 daily fine against Ditech, according to the lawmaker.
The 2016 Foreclosure Relief Act has the potential to make a big difference in neighborhoods throughout Western New York by placing responsibility for abandoned homes where it belongs: with negligent lenders.