Molino sees new state law as a needed tool to limit 'zombie' homes

A new state law that goes into effect today is another tool for communities in their efforts to crack down on the number of bank-foreclosed (“zombie”) homes in New York, according to Batavia’s city manager.

“While the local law that we passed deals with development of these types of homes, this state law is more about monitoring (the banks that have interest in abandoned properties),” Jason Molino said this morning. “It’s a good tool, but it will take time for things to filter out to see the impact.”

The Foreclosure Relief Act is a new law that requires banks or mortgage lenders to maintain properties that have become vacant during the foreclosure period, and also requires that periodic inspections be made. Failure to comply with the law could result in fines up to $500 per day.

The law also includes a toll-free hotline for people to report zombie properties and a statewide registry to track them.

“Once rules are put in place by the state agencies involved, we will have a better understanding of the accountability piece,” Molino said. “The goal is to prevent foreclosures from happening and also as a tracking and enforcement tool to prevent lenders from letting the properties go under water.”

The push to get the law passed in Albany was led by South Buffalo Assemblyman Michael Kearns, who promoted a “shame the banks” campaign.

Prior to this law, it was up to cities and counties to fight the banks that created the zombie homes, usually through fines against the property owners for building code violations. But since banks aren’t taking legal control of the houses, they have been able to avoid paying additional fines or fees.

Under the Foreclosure Relief Act, the state Department of Financial Services – which issues the banks’ state licenses – also has enforcement authority.

To report zombie properties, contact New York's Department of Financial Services at (800) 342-3736.   

About a year and a half ago, City Council passed a local law that provides incentives to owners of highly distressed properties willing to spend the time and money to renovate their homes.

Council acted on a gap financing plan devised by Molino (with assistance from the New York Conference of Mayors) that offers exemptions for up to 25 years on the increase in the property’s assessed value after redevelopment.