New York imposed new requirements Thursday on mortgage lenders to maintain abandoned houses before foreclosure.
The law signed by Gov. Andrew Cuomo threatens banks with civil penalties up to $500 a day for failing to maintain residential properties once they’re aware of vacancies. The old law only required they take responsibility following foreclosure judgments. Cuomo said that has left hundreds of “zombie properties” across the state.
“The banks have to step up and recognize their responsibility, and if they don’t do it they’re going to be fined,” Cuomo told a press conference in front of a vacant house in Syracuse.
“And if they don’t do it the local government can step in and do it or the state can step in to do it, and they’re going to get the bill,” he said. “Because I’m tired of having homeowners pay for the profits of banks.”
The problem is a legacy of the 2007-2008 mortgage crisis that left many homeowners with high mortgage payments and dropping home values when the U.S. real estate bubble burst, Cuomo said.
The new law also establishes an electronic statewide registry of abandoned homes and a state hotline where neighbors can report them, and requires notices to mortgage borrowers emphasizing their right to stay in houses until foreclosure.
A related measure establishes a State of New York Mortgage Agency fund to buy and sell abandoned properties at below-market rates and demolish those beyond repair.