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Higgins proposes legislation to expedite sale of foreclosed homes by banks

In an attack on a buildup of properties left vacant by foreclosure, Rep. Brian Higgins is proposing a bill that would expedite the sale of foreclosed homes by banks.

“Vacant, foreclosed homes tarnish communities and leave neighbors living on these streets with no recourse,” said Higgins, D-Buffalo, who announced the legislation – the Vacant Homes Act – outside an abandoned house in Cheektowaga on Tuesday.

“The existing system lacks urgency to move properties back into the hands of caring homeowners. While properties remain in limbo, communities suffer.”

The measure would require banks to respond to short sales – selling a property for less than the amount owed on that property.

Under the bill, banks and other mortgage lenders would have 90 days to respond to an offer of a short sale. If the offer is rejected, the bank would be required to explain why, provide an economic analysis demonstrating that fair-market value exceeds the offer or demonstrate a reasonable expectation that the owner would receive a better offer within 12 months.

In Erie County alone, about 2,000 foreclosures are filed each year, but it takes an average of three years to move a home to auction.

Oftentimes, homeowners will abandon their properties during the process – usually unaware they are required to maintain the property. Meanwhile, the houses – known as “zombie homes” – fall into disrepair, lose value and blight neighborhoods.

Higgins spoke in front of one such home on Trudy Lane.

Weeds crept up on the porch, and a tattered tarp flapped atop a ruined roof. On the door hung a notice of violations from the Town of Cheektowaga dated May 20, though the house had long been abandoned. Neighbors said they have dealt with the house’s declining condition for even longer.

Denise and Michael Klesic have lived two houses from the vacant property for more than a decade. They described the home as a “thorn.”

“Everybody was really mad,” Denise Klesic said. “This is terrible.”

Michael Klesic said that rats made a home in the property’s overgrown grass and that when the town mowed the lawn, the rats found a new home in his shed, ruined it and forced him to tear it down.

“This is all too common in Western New York,” Higgins said.

Kate Lockhart, a Western New York Law Center paralegal, said the longer a foreclosure process takes, the more likely homeowners are to abandon the properties.

“A short sale finalizes all that,” she said. “They’re able to sell the property, know they’re done with it and know the banks won’t come after them. It’s finalizing something so they can move on. Most of these people have gone through traumatic experiences already.”

A 2015 report from the New York State Department of Financial Services found that New Yorkers faced the fourth-largest foreclosure timeline in the nation, at three years. The nationwide average is less than two years.

Banks, homeowners and communities could all equally benefit from faster sales, Lockhart said.

“The banks can possibly make more money on a short sale earlier in the process,” she said. “And rather than having a vacant and abandoned property in their neighborhood for years on end, neighborhoods can have a new family come in.”

Cheektowaga Supervisor Mary F. Holtz said Higgins’ bill would result in another tool for local government.

“Every neighborhood has some vacant houses or this type of situation, especially after the recession we had,” she said. “It’s not just Cheektowaga. You go to Amherst or Clarence – there are vacant houses in every single neighborhood. It’s the same problem over and over again, and most of it is banks and foreclosures. It’s a continuing problem. Everything we get from the state and federal governments will help us because we can only do so much on a local level.”

Even when the Trudy Lane house is sold, Holtz said, the home would probably need to be demolished in a couple of years because of the continuing neglect.

“It’s a shame,” she said. “It’s a beautiful structure.”