NY Attorney General Announces $13M to Combat ‘Zombie Homes’

This Tuesday, July 5, 2016 photo shows a view of Brooklyn's Gowanus Canal from the rooftop of 363 Bond Street apartments, a new development from Lightstone, in New York. The canal is a Superfund site polluted with decades' worth of industrial waste and sewage, but the developer says the pending more than half a billion dollars cleanup of the toxic waterway hasn't deterred tenants from flocking to the building, where the rent for a one-bedroom apartment starts in the low $3,000s. (AP Photo/Bebeto Matthews)
A view of a new development in New York. (AP Photo/Bebeto Matthews)

ALBANY, N.Y. (AP) — Communities across New York State still reeling from the housing crisis are getting some help from the state in dealing with abandoned properties.

New York Attorney General Eric Schneiderman told The Associated Press Thursday that his office will award $13 million in grants to local governments with a high number of “zombie homes,” vacant properties that often fall into neglect as the foreclosure process drags on.

Without regular maintenance, the homes can become an eyesore or even a haven for criminal activity, dragging down nearby property values and threatening to undermine entire neighborhoods.

“Too many communities across this state have been hit hard by the proliferation of zombie properties,” Schneiderman said. “This new grant initiative puts tools directly in the hands of towns and cities across the state to reverse course, rebuild from the foreclosure crisis, and put zombie homes in the rearview mirror.”

The 100 communities in the state with the most zombie homes and blight may apply for the funds. The money will support local code enforcement and city legal efforts to ensure banks and lenders meet their legal requirements to maintain properties.

The money may also be spent on programs to help homeowners avoid foreclosure in the first place.

The program comes from a $3.2 billion settlement negotiated by Schneiderman’s office with Morgan Stanley, one of several large settlements with financial institutions following the economic downturn.

The grants will range in size from $75,000 to $350,000. There are an estimated 16,000 zombie homes across the state.

The grant program follows the passage of a state law this year that imposes new rules on mortgage lenders requiring them to maintain abandoned houses before foreclosures are completed. Banks that fail to do so face fines of $500 a day.

The new law also establishes an electronic statewide registry of abandoned homes, a state hotline where neighbors can report them and requires notices to mortgage borrowers emphasizing their right to stay in their houses until foreclosure.