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NY Attorney General Introducing Bill To Combat Rise Of 'Zombie' Properties

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Chart courtesy of RealtyTrac
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Long Island is experiencing a spike in "zombie" homes—properties that are often abandoned after their owners receive a notice of foreclosure. They can fall into disrepair, reducing the values of surrounding property and serving as magnets for crime and vandalism.

New York Attorney General Eric Schneiderman is re-introducing legislation to combat the rise of abandoned properties. The bill is aimed at closing the gap of responsibility when a homeowner defaults.

Homeowners are responsible for maintaining a property when they own it. Banks are responsible for keeping it up after a foreclosure. The gap is that in-between time where no one is really responsible for the home.

The problem here is, New York has a really long in-between time.

Daren Blomquist, vice president of the real estate data company RealtyTrac, said it takes nearly three years before a bank can legally take ownership of a home. By that time, a lot of defaulted borrowers move on with their lives and move out.

"It's one of the top five longest in the country. Close to a thousand days in New York," he said.

Blomquist said the number of these so-called 'zombie' homes have jumped more than 50 percent in New York in the first quarter of this year.

"The other issue, I should say, is we are finally seeing the banks starting to push through a lot of the foreclosures that were delayed in that whole robo-signing issue way back in 2010," he said.

Robo-signing was when banks signed off on foreclosures en masse without doing proper due diligence.

In addition to an already lengthy process, a lot of homes in New York got caught up in lawsuits over improper foreclosures. Because of these abuses, judges became more strict with banks inadvertently delaying the change of ownership.

Schneiderman's bill will make banks and other mortgage lenders responsible for maintaining properties abandoned after the start of a foreclosure. He is re-introducing the bill after it failed to come up for a vote in the New York State legislature last year.

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