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Lending

New York Attorney General: Zombie property killer

Schneiderman wants twice the amount of land banks

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New York Attorney General Eric Schneiderman is ready to raze hell over zombie properties infecting the Empire State.

Schniederman said that he will introduce legislation to compel banks and mortgagees to maintain vacant properties that are abandoned because of delays in the foreclosure process.

More directly, Schneiderman will propose a bill that would double the number of non-profit land banks that will be able to buy abandoned and foreclosed properties to rehab them or to raze them to the ground.

Schneiderman says such legislation is needed because of the slate of vacant homes in the state. When lenders don’t complete the foreclosure process and take possession these empty properties are called “zombie properties.”

The foreclosure process takes almost three years in New York. Tenants commonly abandon properties when they are foreclosed on, and Schneiderman says that the banks are best positioned to care for it.

Because there are no residents, zombie properties are targets for crime and vandalism and have a negative impact on neighborhoods.

“Every New Yorker deserves to live in a safe and secure community, where the house next door isn’t left to rot,” Schneiderman said in an interview with the Poughkeepsie Journal.

Schneiderman wants to compel lenders to pay for the maintenance of such zombie properties and he wants to create a registry to allow municipalities to track these zombie homes for code violations.

Schneiderman’s legislation may have an uphill battle and there could be unintended consequences – banks aren’t just going to roll over and absorb these costs without fighting it.

Chicago is waging its own fight against zombie properties. From 2008 to 2010, 8.7% of foreclosures filed in Cook County, Illinois, were zombie foreclosures, accruing to more than 5,800 zombie properties in the city of Chicago. But this is just the beginning.

According to a recent report from the Woodstock Institute, if the trend continues, there will be an additional 7,200 zombie properties in Cook County, including nearly 3,200 in the city of Chicago, by 2015.

RealtyTrac statistics show that as of mid-2013, there were 300,000 zombie foreclosures are haunting U.S. neighborhoods.

For a detailed look at the New York state problem, click here.

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