BUFFALO, N.Y. (WIVB) – New York’s financial watchdog, the Department of Financial Services is getting tougher on banks and mortgage servicers that fail to maintain their foreclosed property, the next step in enforcing a new law.
The “Foreclosure Relief Act” took effect last December, and the DFS has launched an awareness campaign to help local governments understand how the new measure can help them crack down on “zombie” property—homes that have been foreclosed, abandoned, and neglected by the bank, or mortgagee.
What often happens is the bank forecloses, the homeowners vacate the property, then the bank neglects to follow through and take control of the property, leading to a zombie home which is nearly impossible to sell because the titleholder is nowhere to be found.
Neighbors often do battle with the banks to prevent a zombie home from creating a blight on their neighborhood, and lawmakers like State Assemblyman Michael Kearns have initiated “shame the banks” campaigns.
“Prior to the new law they were only responsible for maintaining the outside. Now the mortgagees and the service providers have to provide care and maintenance for the inside of the property.”
Kearns says the new law encourages banks to be good neighbors, “They can’t cut and run, they can’t discharge the mortgage and say ‘this is not our problem’ anymore. They have a responsibility to be good neighbors to our community.”
Banks that fail to comply with the new law can be fined by the local government, or DFS, up to $500 a day, but DFS holds the real hammer–they can take more serious action against any bank that refuses to comply, including cancelling their charter.