Can Albany Agree On How To Kill "Zombies"?

Can Albany Agree On How To Kill "Zombies"?

Can Albany Agree On How To Kill "Zombies"?
September 23, 2014

In Manhattan there is an ever more expensive real estate battle over apartments and penthouses taking place in the clouds.

But far below the skyline dwellings, in other parts of the state, there is an ongoing clash just to get someone to take ownership of properties worth millions of dollars less than those luxury condos. From Long Island to Buffalo to the North Country, homes foreclosed upon during the last recession sit without tenants. However, in many cases, the owners of these forsaken buildings do not even know they are still listed on the deeds.

This phenomenon is what Assemblyman Mickey Kearns is trying to eradicate with a pair of bills aimed at forcing banks to take control of homes that have essentially been incompletely foreclosed on, leaving a property with the original owner on the deed and no one to take care of it.

Kearns’ concerns about these deserted houses— known colloquially as “zombie properties”—are both aesthetic and safety-related.

“It negatively affects other properties in the neighborhood,” Kearns said. “It increases the expense of local taxpayers. … [Moreover,] first responders, if there is a fire, they’re going to these abandoned properties when they could be working on other public safety matters.”

The first of Kearns’ two bills would force banks to obtain a mortgage foreclosure in good faith, while the second would require banks to provide the contact information for the person who is supposed to be performing upkeep on the foreclosed property.

New York has the third-highest home foreclosure inventory in the nation, behind only Florida and New Jersey, and Kearns has already had hundreds of local municipalities—villages, towns, cities and counties included—sign on in support of his bill. A map in his office marking each of those supporters with a red pushpin makes the state look like it has chicken pox, especially in the western and downstate regions.

The bills are mirrored in the Senate by legislation sponsored by Sen. Patrick Gallivan, who, like Kearns, represents Western New York.

The Capital Region’s Center for Economic Growth, through its Local Government Council, has named fixing the blight caused by abandoned properties the No. 3 goal on its legislative agenda, and singled out the Kearns/Gallivan bills as a means to accomplish that end.

Despite this support, passage of the legislation is uncertain. This session is not the first time Kearns has tangled with the banking industry; he has introduced versions of the two bills in each of the last two years—both times to no avail. The bill aimed at making banks provide a contact has passed the Assembly but was tabled in the Senate in 2012.

Lobbying by banks represents a significant portion of the advocacy dollars spent each year in Albany. According to JCOPE, real estate and construction lobbying and banking lobbying totaled $28,990,312 in spending in 2012. While it is up in the air how much of that hefty spending would go toward wooing votes in opposition to his proposed legislation, Kearns has already faced resistance from banks to his contact information bill. When he initially tested the bill two years ago, he met with bank officials who said they feared for the lives of the people who would have to answer phone calls from angry neighbors living next to the foreclosed properties. Ultimately, concluded Kearns, the banks do not want to change.

“They think this is someone else’s problem,” he said. “When times are bad, they don’t want that responsibility.”

Advocates for the banking industry openly opposed Kearns’ bills when they were previously put forth in the Legislature. A memo in opposition to the contact information bill was submitted in June of 2012, and another memo in opposition to the “good faith” bill was submitted in May of last year.

When the bill regarding the posting of contact information was introduced in 2012, it drew criticism from the New York Bankers Association, which argued that the legislation would unnecessarily duplicate and possibly conflict with existing notice requirements. The association also maintained that posting an owner’s direct phone line could result in inappropriate calls or harassment and potential charges of noncompliance if the notice were removed from the structure.

While the opposition this session to Kearns’ and Gallivan’s bills will likely again be fierce, the legislators have a powerful new ally this time around: the state’s toughest bank prosecutor, Attorney General Eric Schneiderman.

In early February Schneiderman announced that he would ask the Legislature to take up a proposal from his office to combat “zombie properties.” A spokesman for Schneiderman, Matt Mittenthal, said the difference between the existing bills and the attorney general’s is that the AG’s would mandate banks to assume responsibility for the upkeep of the buildings as soon as they became vacant, as well as create a statewide registry of zombie homes banks would be required to update, so that municipalities could track the blighted properties within their borders and monitor them to ensure they are up to code.

Mittenthal said the AG’s office has reached out to some members of the Assembly and begun conversations with Senate Independent Democratic Conference Leader Jeff Klein about its proposed legislation. As of the reporting of this article in mid-February, the AG’s office and Kearns’ had not yet communicated.

Other legislators have offered up similar remedies to tackle the state’s “zombie” problem. Sen. Terry Gipson is sponsoring a bill that would force plaintiffs in foreclosure cases to maintain the property in question in good faith. Sen. Tim Kennedy has proposed a bill that would do the same thing, and in addition make violating the law a misdemeanor.

Regardless of the legislation’s final form, which could take time to develop, Kearns’ goal is to help banks become better neighbors—though he anticipates that effort will take some prodding.

“They don’t want to be a good neighbor,” he said. “I’m not asking all the banks—[just] some of the big banks—to be good neighbors.”

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Matthew Hamilton