For Immediate Release: Wednesday, September 19, 2018
Contact: General HPD Press Contact, hpdmedia@hpd.nyc.gov

 

City Files Lawsuits Against Mortgage Holders of Zombie Homes

Building on the work of HPD’s Zombie Homes Initiative, the City of New York filed five lawsuits against non-compliant mortgage holders, seeking more than $1 million, for neglecting their properties


NEW YORK, NY – The New York City Department of Housing Preservation and Development (HPD) joins the New York City Law Department to announce that the City has filed lawsuits against the mortgage holders of five zombie properties—vacant, distressed, one-to-four family homes with delinquent mortgages—throughout Brooklyn. These cases were filed leveraging data collected by HPD’s Zombie Homes Initiative, which works with the New York City Law Department to hold non-compliant banks and mortgage servicers accountable for failing to maintain vacant properties on the brink of foreclosure.

The City is suing for over $1 million in penalties under the 2016 New York State Zombie Property and Foreclosure Prevention Act and to reimburse the City for emergency repair and maintenance costs incurred since the property was designated as abandoned.

“Zombie homes are blight on our neighborhoods and contribute to the city’s housing shortage. Through HPD’s Zombie Homes Initiative, we are holding mortgage holders accountable and intervening at properties that pose public safety risks, while also conducting extensive outreach to help homeowners who may be on the brink of foreclosure,” said HPD Commissioner Maria Torres-Springer. “I applaud the Law Department for their efforts and thank our partners at LISC and the New York State Attorney General’s Office for their leadership in the fight to address zombie homes and maintain strong and healthy New York City neighborhoods.”

“Through the funding my office secured in our settlements with the big banks, we’ve been able to empower communities across the state to fight the devastating effects of the foreclosure crisis and housing downturn,” said New York State Attorney General Barbara D. Underwood. “I’m proud that these funds have made it possible for New York City to tackle zombie homes and hold mortgage holders accountable to ensure stronger and safer communities.”

“HPD’s Zombie Homes Initiative has achieved substantial success ensuring that banks fulfill their obligations to maintain vacant properties subject to foreclosure. But a stubborn few financial institutions have ignored HPD’s notices and have failed to meet their legal obligations to prevent these properties from becoming community eyesores. Consequently, the City has filed the first round of suits to ensure compliance and to seek statutory penalties,” said New York City Corporation Counsel Zachary W. Carter.

“In a city that desperately needs to uncover every possible housing resource, HPD has accomplished so much, so quickly, with its LISC zombie grant,” said Helene Caloir, Director of LISC’s NYS Housing Stabilization Fund. “The agency has succeeded in identifying many zombie homes, taking legal action against a first group of lienholders who were failing to maintain their vacant houses, and helping tens of thousands of at-risk homeowners avoid foreclosure.”

HPD’s Zombie Homes Initiative was launched in 2017 through funding from the Local Initiatives Support Corporation (LISC), which originated from settlement agreements with banks obtained by the New York State Attorney General’s Office. Over the past year, the Initiative has worked with City and State agencies, as well as community stakeholders, to identify zombie homes in Brooklyn, Queens, Staten Island, and the Bronx to create a database of properties that are likely to be zombie homes, design innovative ways to breathe new life into these properties, and connect residents at risk of losing their homes with foreclosure prevention resources.

Since its inception, HPD’s Zombie Homes Initiative has identified up to 4,000 zombie homes throughout the city, conducted more than 500 surveys of likely zombie homes, sent 26,000 mailings and made 15,000 robocalls to homeowners on the brink of foreclosure, and initiated City interventions on over 125 properties. These interventions included securing open and accessible properties by HPD’s Office of Enforcement and Neighborhood Services, lot clean-ups conducted by the Department of Sanitation, and inspections by the Department of Buildings.

“Vacant and abandoned homes undermine property values and sow the seeds of neighborhood decay. The Department of Financial Services is pleased to have provided assistance to HPD and looks forward to continuing to work with all municipalities throughout the state erase the blight of zombie homes from New York,” said New York State Department of Financial Services Superintendent Maria T. Vullo.

 “At a time when creating and maintaining affordable housing remains one of our most urgent priorities, I’m pleased that HPD’s ‘Zombie Homes’ initiative is achieving meaningful results in turning vacant eyesores into hope for so many families and individuals in New York City,” said Assemblyman Steven Cymbrowitz (D-Brooklyn), Chair of the Assembly’s Housing Committee.

“Zombie homes serve as a stark reminder that for some New Yorkers, the housing crisis that began in 2008 still isn’t over. Just last year, the foreclosure rate in our city reached its highest level since 2009 – and the communities I represent have been particularly hard-hit. At a time when our homeowners are under increasing financial stress and these deteriorating properties are blighting communities, we need to use every tool in our regulatory toolbox to hold mortgage services and lenders accountable. I applaud HPD and the Law Department on the aggressive action they are taking today, and look forward to working with them to end the foreclosure epidemic plaguing our city” said Council Member Rafael Espinal.   

With support from HPD, the New York City Law Department has filed lawsuits against non-compliant mortgage holders with the New York State Supreme Court on the following Brooklyn zombie homes:

Zombie Home

Mortgage Holder

581 Saratoga Avenue

Rushmore Loan Management Services, LLC

31 Essex Street

Ocwen Financial Corporation

1554 Dumont Avenue

Seterus, Inc.

1889 Bergen Street

CitiMortgage, Inc.

1831 Park Place

Wells Fargo Bank, NA

The Zombie Homes Initiative surveyed likely zombie homes to assess their vacancy status and maintenance conditions and sent warning letters to lenders and mortgage servicers that failed to maintain these properties according to State law. The City brought suits against the lenders and mortgage servicers that were not in compliance after receiving the notices.

The Zombie Homes Initiative’s work furthers the efforts of the Zombie Property and Foreclosure Prevention Act to curb the threat that zombie homes pose to communities. The law requires mortgage holders to maintain properties they know to be vacant and abandoned, or face a civil penalty of $500 per property, per day, which the New York City Law Department can enforce. Any penalties won will be retained by the City, and the City will also seek to require the lenders and mortgage servicers to bring properties into compliance and to expedite their foreclosures.

The Zombie Homes Initiative pilot concluded in July 2018, but HPD will continue to work with the Law Department to evaluate which of the remaining properties surveyed are appropriate for legal enforcement. HPD will also continue to track and survey zombie homes to identify properties that are not being maintained in accordance with the law. Additionally, HPD will explore avenues for working with the State Legislature to strengthen the Zombie Property and Foreclosure Prevention Act.

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The New York City Department of Housing Preservation and Development (HPD) is the nation’s largest municipal housing preservation and development agency. Its mission is to promote quality housing and diverse, thriving neighborhoods for New Yorkers through loan and development programs for new affordable housing, preservation of the affordability of the existing housing stock, enforcement of housing quality standards, and educational programs for tenants and building owners. HPD is tasked with fulfilling Mayor de Blasio’s Housing New York Plan which was recently expanded and accelerated through Housing New York 2.0 to complete the initial goal of 200,000 homes two years ahead of schedule—by 2022, and achieve an additional 100,000 homes over the following four years, for a total of 300,000 homes by 2026.  For full details visit www.nyc.gov/hpd and for regular updates on HPD news and services, connect with us on Facebook, Twitter, and Instagram @NYCHousing.