Share this article

print logo

Communities find success taking the 'zombie home' fight to court

At this rate, zombies won't have anywhere to live around here.

Towns, cities and villages in Buffalo Niagara, along with state regulators, are using bulked-up powers included in a recent state law to tackle "zombie homes" – houses abandoned by their owners that the lenders have yet to take over.

Local officials have long expressed frustration with banks that take years to wrap up the foreclosure process and fail to maintain the property in the interim. In response, more communities are suing financial institutions to force them to move faster to fix up the zombie homes and get them into the hands of new owners.

Niagara Falls extracted promises to speed up foreclosures on vacant homes in the city. And, most recently, the Town of Tonawanda settled three of the 10 lawsuits it has filed against zombie home lenders, winning $52,000 in awards that the town will apply to community development work in Tonawanda.

Officials say that filing violation notices, threatening lawsuits and taking lenders to court has nudged the banks to clean up their act, and the number of zombie homes is shrinking.

"That's why it would take three, four, five years to get any movement on these properties. There just wasn't any, for lack of a better word, incentive for them to move off their position," Tonawanda Supervisor Joseph Emminger said. "When this law went into effect, we were very aggressive on this."

Number of foreclosures is still high

Properties attain zombie home status after the property owner stops making mortgage payments and the lender opens foreclosure proceedings.

Not every foreclosure produces a zombie home. Those develop when the owner vacates the home but the mortgage holder takes its time in winning a court's permission to foreclose on the property and resell it. Neighbors object if abandoned homes deteriorate and detract from the other homes on the block.

Foreclosures filed in Erie County hit 2,759 in 2009, immediately after the housing crisis, but they fell to 1,668 in 2017 and 1,445 for 2018 as of one week ago, said County Clerk Mickey Kearns, calling that figure still stubbornly high.

"In Erie County, we have a foreclosure crisis," Kearns said, one that defies the improving economy.

Officials who wrangle with the problem of zombie homes say mortgages go unpaid, sparking a foreclosure, when the homeowner ends up in a nursing home; faces an expensive medical crisis; loses a job or divorces; dies without an heir; or dies leaving behind so much debt that the heirs don't want to assume control of the house.

Advocates who work with people in danger of losing their homes recommend staying in the house as long as possible, while trying to work out an arrangement with the lender. Kate Lockhart, foreclosure data manager with the Western New York Law Center, said too many homeowners leave after getting the initial foreclosure notice.

Staying is better for the homeowners, better for neighbors and the larger community and for the banks, Lockhart said, because financial institutions by definition aren't property managers.

Lenders often drag out the foreclosure process, seeking extensions, because they don't want the responsibility and liability that comes with owning the home, critics say, or the home's value isn't worth the trouble. Grass and weeds can grow out of control, siding and roof shingles can peel off and basements can flood and grow mold.

James McGee lives across the street from a zombie home at 72 Paige Ave. in the Town of Tonawanda. He said no one has lived there since shortly after the 2006 October storm. He said crews came by to trim back weeds and grass and paint the house over the summer, but otherwise nothing's been done.

"It's been an eyesore for the neighborhood. It's been pretty tough to look at for 12 years," said McGee, who would like to see it torn down.

Reducing the load

New York has under 17,000 properties on its registry of zombie homes, the state Department of Financial Services reported. That's down from nearly 30,000 when the registry was opened.

Erie and Niagara counties combined have 1,464 zombie homes, according to the department, which said it doesn't track the number of zombie homes by municipality.

The Town of Tonawanda said it had 250 zombie homes, but 210 of them were sold or occupied since April 2017, leaving the town with about 40 now.

Amherst, for its part, has about 40 zombie homes. The town has prodded banks to act by threatening the worst homes with demolition, and it has torn down five so far, said Lisa Kistner, assistant to the town supervisor.

Zombie homes are a frustration for local governments, because it's pointless to go after the homeowner who abandoned the property and impossible to act against a bank that doesn't yet own the property.

Even before the 2016 state law, however, Buffalo made a point of going after zombie properties in the city's Housing Court, said Lou Petrucci, the city's assistant director of permits and inspection services.

Kearns, now the county clerk, has worked on zombie homes since his days on the Buffalo Common Council. He pushed for statewide zombie home legislation as a member of the State Assembly.

Approved in 2016, that law, among other provisions, required lending institutions to report zombie homes to the state registry and subjected them to fines of $500 per day for failing to properly maintain the homes.

Since then, the state has filed 14 enforcement actions and penalized companies $258,675 for violations, including a $119,000 fine against PHH Mortgage for a single property in Columbia County.

The state also has sent out 2,000 letters to banks and mortgage holders advising them to repair or maintain their properties, the department said, and most have complied.

"Overall, the effect of the law seems to be that servicers are being better at maintenance, they're being proactive," Lockhart said. "The goal of this law isn't necessarily just to bring money in; it's to get compliance."

Communities go to court 

In this area, a number of communities have filed – or intend to file – zombie home lawsuits against the financial institutions.

The Western New York Law Center is preparing lawsuits on behalf of Cheektowaga and West Seneca, Lockhart said.

And Niagara Falls in 2017 sued Citizens Bank over properties that weren't kept up to city code. The city and the bank settled earlier this year, with Citizens Bank agreeing to foreclose on homes in Niagara Falls much faster.

The Town of Tonawanda believes it is the first in the area to reach a financial settlement with a zombie home lender under the 2016 state law.

The town filed 10 lawsuits in State Supreme Court this past spring, and it recently approved settlements over three zombie properties.

In all three cases, the town said the three homes were abandoned and visits by town inspectors confirmed the properties were in disrepair. The town also said the lending institutions had ignored notices of violation.

The settlements with Citi Mortgage, Ocwen Financial Corp. and PHH Mortage/HSBC Bank USA range from $5,000 to $39,800. The town will put the money toward a community development fund, said Jim Hartz, the town's director of community development.

More importantly, Emminger and Hartz said, the lawsuits nudged the banks into action.

The banks finished foreclosing on two of the three properties. One, at 62 Cable St., was resold in August to a limited liability company. The company has plumbers and other contractors working on the house and, it's believed, intends to flip the property after finishing extensive repairs.

"That's exactly what we want," said Emminger, adding more lawsuits are likely.

Neighbors say the bank that now owns 297 Grandview Ave. put money into a new roof, new driveway and new front steps, after the home sat empty for years. A For Sale sign is on the front lawn.

But the third home, on Paige Avenue across from McGee, remains in the foreclosure process under PHH, the mortgage servicer, and HSBC, the mortgage holder, according to real estate records.

The Buffalo News reached out to three of the four institutions named in the lawsuits. All declined to comment or did not respond.

A group that represents the interests of the state's financial institutions, however, said its members have long sought to address the problem of abandoned properties.

"We supported efforts in the Legislature which would have accelerated the conclusion of the foreclosure process for vacant and abandoned properties, thus greatly reducing the period of time in which a property can fall into disrepair," said Michael Smith, president and CEO of the New York Bankers Association, in a statement. "Though NYBA is not a party to these discussions, we believe these settlements reflect the application of these laws.”

There are no comments - be the first to comment