Lawmakers Start Fight against 'Zombie' Properties in Putnam, Dutchess

State Senator Terrence Murphy (R-Westchester/Putnam/Dutchess) and the leader of the Independent Democratic Conference in Albany, Sen. Jeff Klein (Bronx/Westchester) called yesterday for new legislation to force banks to maintain properties they're foreclosing on -- and to speed up the foreclosure process.

Standing in front of an abandoned house at 54 Lakeview Road in Carmel on Monday, the two accused banks of stealing millions from Putnam and Dutchess homeowners after leaving foreclosed and 'zombie' properties in disrepair.

"Residents of the 40th Senate District live within some of the most expensive areas in the nation and yet are under attack by neighboring zombie properties," Murphy said. "These zombie homes not only prove to be an eyesore in our communities but pose real dangers to our neighbors and children. It is not unreasonable to hold big banks accountable to properly care for and maintain the properties under their ownership in the Hudson Valley. I thank Senator Klein for his leadership on this issue and look forward to our continued bipartisan partnership to protect our local neighborhoods from the modern day zombie attacks."

They unveiled a report called "The Great American Bank Robbery: 40th State Senate District and Putnam & Dutchess Counties," detailing over $6 million in property value depreciation resulting from poorly maintained bank-owned homes and "zombie properties."

And they called for new legislation to monitor bank-owned homes, require banks to maintain zombie properties and create a community reinvestment fund to rid communities of blight.

"The fallout of the subprime mortgage crisis hurts taxpaying homeowners the most. Banks, who own properties through foreclosure, let homes languish in awful states of disrepair that devalue surrounding homes even though they must by law maintain these properties," Klein said. "Worse, zombie properties that are in the legal limbo of foreclosure rot in communities throughout the state negatively impacting property values. This is a problem across New York State affecting homeowners' greatest assets and we must hold banks accountable."

In the 40th senate district, which includes sections of Westchester, Putnam and Dutchess, bank-owned homes resulted in $846,003 in property depreciation, while zombie properties, or properties where homeowners have walked away, accounted for $1.38 million in property value depreciation.

They released details of their findings:

Studies show that homes within a 300-foot radius of a bank-owned or zombie home depreciate by 1.3 percent, an average $5,000.

Wells Fargo is in the process of foreclosing on the majority of zombie properties in the 40th senate district.

In Dutchess County, 247 zombie properties impacted 781 surrounding homes. Most of the zombie properties are awaiting foreclosure by Wells Fargo. The abandoned homes cost homeowners in this county $2.59 million in lost property value.

In Putnam County, 114 zombie homes negatively affect 289 neighboring homes. Wells Fargo is in the process of foreclosing on the majority of the vacant properties in Putnam. The impact of zombie properties in Putnam totals $1.23 million in property value depreciation.

Klein and Murphy are introducing a bank-owned property bill that they say increase transparency by creating a registry of foreclosed, vacant and abandoned properties in the state for the disposal of municipalities and the Office of the Attorney General, and grant the Attorney General the right to impose fines and initiate legal proceedings against financial institutions violating of the law.

Legislation is also proposed to expedite the foreclosure process when a property is found to be vacant or abandoned. The longer an abandoned home stays in foreclosure, the greater the chances of blight, resulting in deterioration in value to the property itself and the neighborhood at large.

The zombie property legislation would require mortgagees and their loan servicing agents to maintain vacant properties from the point they are discovered to be abandoned, create a statewide registry of vacant and abandoned properties, and require the attorney general to set up a toll-free hotline for neighbors and community residents to report properties that they believe to be vacant and abandoned, report problems, as well as to find out information regarding the foreclosure status of these properties.

Murphy said municipalities are often at the forefront of dealing with this crisis. But the cities, towns and villages are hampered by antiquated laws that make it difficult for them to discern the true owner of a zombie property. Legislation must be passed that would give these localities the ability to protect their citizens from these nuisance and public health risks, he said. The community reinvestment program would create a council of housing experts to disperse funds to help refinance homes, or help communities create affordable housing, middle-class homes or demolish dangerous structures. The program empowers communities to eliminate blight and take ownership of deteriorating parcels.