New York Attorney General Eric Schneiderman said he will propose a bill that would regulate how the state's mortgage lenders treat property during the foreclosure process.
The measure, which would be an expanded version of legislation proposed during the last legislative session, focuses on curtailing so-called zombie properties or vacant and abandoned homes left unmaintained during a long foreclosure proceeding.
The measure will also direct mortgage lenders to notify borrowers who fall into arrears on their mortgage loans that they have the right to remain in their homes until a judge declares the foreclosure complete, the attorney general's office said.
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In addition, when borrowers abandon property, the measure will propose mortgage lenders and servicers identify secure and maintain abandoned properties soon after they are abandoned.
"Leaving zombie properties to rot is unfair to municipalities and unfair to neighbors, who pay their taxes and maintain their homes," Schneiderman said.
In the next two weeks, Schneiderman said his office will resubmit to the legislature the bill that would require banks to take responsibility for maintaining properties much earlier in the foreclosure process, take the burden off of towns and cities, and allow local governments to more easily identify the mortgagees of these properties to make sure they maintain them.
"And as my office enforces the requirement that banks take responsibility for these properties, any fines we levy will go into a fund to help towns and cities hire more code enforcement officers," Schneiderman said.
Schneiderman's office contended these measures are necessary to help preserve the value and integrity of nearby properties that have not fallen into foreclosure.
He has also proposed mortgagers register abandoned property on an Abandoned Property Register that his office would maintain. Such a registry would centralize information about the property in a location that will be easily accessible to other state and local officials.
"The ripple effects of abandoned properties due to foreclosure continue – year after year property values plummet and our once quiet and family-friendly neighborhoods are now becoming hotbeds for criminal activity," Independent Democratic Conference Leader Jeffrey Klein said.
More than six years ago, New York State Assemblywoman Helene Weinstein and then State Sen. Schneiderman and Klein worked together to pass legislation requiring that financial institutions maintain properties upon foreclosure, Klein said.
"Attorney General Schneiderman's legislation is the next vital step in holding banks accountable for these zombie properties in our communities and providing the needed financial assistance to the localities that are forced to maintain these eyesores. This bill will ensure we not only keep our communities safe, but our neighborhoods beautiful and strong," Klein said.
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