Cities awarded over $600K as payback for derelict properties
Mortgage servicers, banks put “on notice” by Zombie Law
Albany, Schenectady and Troy have been awarded more than $665,000 as part of lawsuits they filed against top mortgage-holders, including Ocwen Financial Corp. and PHH Mortgage, as payback for derelict properties.
The three cities last July filed 18 lawsuits seeking to use the state’s Zombie Law, legislation in New York that compels deadbeat owners to provide upkeep to unmaintained properties.
The 18 flagged properties in their cities racked up 502 state building code violations. The Zombie Law now gives cities the ability to sue mortgage servicers for $500 per code violation per day that the violation exists.
Schenectady Mayor Gary
Mccarthy said enforcement action puts mortgage servicers and banks on notice that if vacant properties aren’t maintained, they will be held accountable.
Of the 18 lawsuits, seven target PHH Mortgage-held structures in Schenectady that have racked up 131 violations.
A “zombie” is a vacant property that is facing foreclosure, but the bank or lender has left the action uncompleted. They’re often left in legal limbo with the owner led to believe by the financial institution that the owner has lost the property while the financial institution fails to maintain it, according to a joint statement issued by the cities of Schenectady, Troy and Albany on Tuesday.
As sites fall into further despair, neighboring structures crumble and neighbors blame the city, which often legally cannot enter the property to deal with the most outwardfacing issues.
“Vacant and distressed properties continue to harm quality of life and property values in our neighborhoods and we must use every tool at our disposal to hold negligent financial institutions accountable,” Mccarthy said. “We have made great strides dealing with vacant properties across the city and we’ll continue to use the resources available to enforce the regulations and strengthen our communities.”
Of the 334 vacant and abandoned buildings in Schenectady, 15 are bank-owned. Of the remainder, 221 are private residences and 98 are city-owned.
The number of city-owned homes is historically low due to a number of factors, city officials said, including the foreclosure moratorium that began in
2020 and expired earlier this year.
By comparison, the city owned 291 residential buildings in late 2019, a number that 18 months later had declined to 156.
Capital Region cities said last summer they envision strength through numbers. An additional $200,000 may be paid to the three cities if any outstanding code violations are not resolved in accordance with the settlement
terms.
The enforcement actions were funded through the state Attorney General’s office through the Local Initiatives Support Corp. as part of the Zombie and Vacant Properties Remediation and Prevention Initiative. The effort was made possible by the Cities for Responsible Investment and Strategic Enforcement program, which is funded by Enterprise Community Partners.