New York unveils $13 million program for cities' fight against zombie homes
New grant program uses Morgan Stanley settlement funds
The state of New York is taking its next steps in its ongoing battle against neighborhood blight caused by abandoned foreclosures by unveiling a new program designed to help cities throughout the state fight back against the rise of zombie homes.
Last month, New York Gov. Andrew Cuomo signed what the state called “sweeping” legislation to reform the state’s foreclosure process and address the state’s issues with zombie homes.
According to Cuomo’s office, the legislation combats the blight of vacant and abandoned properties by expediting the rehabilitation, repair and improvement of these properties, and enables the state to assist homeowners facing mortgage foreclosure.
Additionally, the new laws will also impose a pre-foreclosure duty on banks and servicers to maintain zombie homes, creates an electronic registry of abandoned properties, and expedites foreclosure for vacant and abandoned properties to get them back on the market.
Now, the state is going a step further.
Earlier this week, New York Attorney General Eric Schneiderman announced a new program that will help New York’s city governments track and address zombie homes in their respective cities.
According to Schneiderman’s office, the Zombie Remediation and Prevention Initiative will provide $13 million in grants to local governments to fight zombie homes.
Schneiderman’s office said the money will be awarded via a “competitive” application process.
According to Schneiderman’s office, the 100 cities with the greatest problem of zombies and vacancy are invited to apply for the funds.
The money will address housing vacancy and blight by bolstering municipalities’ capacity for housing code enforcement, for tracking and monitoring vacant properties, and for legal enforcement capacity to ensure banks and mortgage companies comply with local and state law, Schneiderman’s office stated.
Schneiderman’s office added that the grants also require communities to develop “innovative” programs and policies and connect at-risk homeowners to services so they can avoid foreclosure and stay in their homes.
“Too many communities across this state have been hit hard by the proliferation of zombie properties,” Schneiderman said. “This new grant initiative puts tools directly in the hands of towns and cities across the state to reverse course, rebuild from the foreclosure crisis, and put zombie homes in the rear-view mirror.”
According to Schneiderman’s office, the grant program will be funded by money received by the state from Morgan Stanley as part of the company’s $3.2 billion settlement for “deceptive” mortgage bond practices, which was announced in February.
That settlement generated $550 million in cash and consumer relief for New Yorkers, Schneiderman’s office stated
This isn’t the only housing program that New York is funding using the Morgan Stanley settlement.
Earlier this month, New York City announced plans to launch a “first of its kind” program to buy a number of delinquent loans from the Federal Housing Administration as part of an effort to keep struggling homeowners from losing their homes to foreclosure.
The cost of that program is $13 million, and $2.9 million of that is coming from the Morgan Stanley settlement.
As for this latest effort to fight zombie homes, Schneiderman’s office said that the Local Initiatives Support Corporation, a national community development intermediary that specializes in affordable housing, economic development, and community revitalization, is running the grant program.
According to Schneiderman’s office, LISC selected the grantees for this program based on the number of abandoned properties within the municipality; the proportion of such properties compared to the overall size of the municipality; and its level of general economic distress.
Additionally, all invitees must have populations of at least 5,000 residents and at least 100 vacant and abandoned properties.
LISC expects to award grants in amounts ranging from $75,000 to $350,000, depending on the size of the municipality, the scope of its zombie problem, and its track record and capacity for addressing such issues, Schneiderman’s office stated.
“The financial crisis might seem like a distant memory to some, but the vacant properties left in its wake are continuing to destroy the quality of life in many of our communities,” said Denise Scott, executive vice president with LISC. “Local leaders now have a strong policy framework, and LISC is helping deliver targeted resources and housing expertise, so neighborhoods can recover. We are gratified to be working closely with Attorney General Schneiderman’s office to help municipal leaders across the state take effective action against zombies.”