While the housing market is improving, many neighborhoods are still feeling
the impact of zombie foreclosures. A zombie foreclosure occurs when a
property is abandoned after a foreclosure action begins but prior to completion,
leaving the property as a dilapidated eyesore in the neighborhood. In
many cases, maintenance is nonexistent and neighborhood property values
face a rapid decline as a direct result. Many states and municipalities
have started taking action. Recently, the state of New York has come to
the realization that legislation is required to ensure that neighborhoods
do not suffer a negative impact due to abandoned properties.
Although New York saw the amount of abandoned homes greatly increase as
a direct result from the recession of 2008, the numbers remain quite staggering.
While in general, the foreclosure rate may be declining, the Zombie rate
continues to rise in the state. Statistics provided by RealtyTrac indicate
New York Zombie foreclosures during the first quarter of 2015 totaled
16,777, or 19% of all foreclosures. That is a 54% increase from the previous
year. New York is not alone, states like Ohio have declining foreclosure
activity year over year, yet the Zombie rate continues to increase.
New York’s Fight With the Zombie
In 2015, New York legislators met with major mortgage lenders to discuss
proposed changes in the principle responsibilities for abandoned properties.
A significant shift was agreed upon. Banks or servicers would begin assuming
maintenance duties that had previously been in the hands of the residents.
After all, lenders have the most to gain by maintaining and improving
In New York, lenders who can prove that the property is in fact abandoned
will be able to enter the property, assess maintenance and repair needs.
In return, the lenders and servicers will be allowed to fast track the
foreclosure process. Should a lender or servicer take advantage of the
fast track process, they will be legally responsible for maintaining the
property during the foreclosure process, rather than waiting until the
In order to qualify for the program in New York, the first inspection must
be completed within 60 days, and then continue every 30 days afterwards
until the property is sold. The Lender will ensure the property is secure—locks
are replaced, windows boarded or in place – as well as maintain
the yard and surrounding property.
New York is creating a database of all Zombie foreclosures to expedite
the process. Statistics show that a foreclosure in New York takes years
(1498 days to be exact) for the process to be completed. By accurately
tracking the Zombie foreclosures, appropriate action can be taken to expedite
the foreclosure process on abandoned and neglected properties.
New York is not alone in its quest to remove blight due to Zombie foreclosures.
In recent years many municipalities in California created registries requiring
foreclosing lenders to register properties with the county and require
ongoing inspections and reporting from the time of the initial foreclosure
filing until the property is eventually sold to a third party. What makes
New York unique is the carrot provided to lenders and servicers with a
fast track foreclosure solution so long as certain safeguards are met.
Our law firm will be paying close attention to see if this trend picks
up in other states.
Contact Geraci Law Firm at (949) 298-8050 today, or contact NemaDaghbandanfor more information.