Thousands of vacant and abandoned eyesores are blighting neighborhoods across New York as the foreclosure crisis expands along a troubling new front: zombie loans.
A recent 38 percent spike to more than 12,000 properties in the second quarter means New York is now ranked the No. 1 metro area for the most vacant and abandoned homes in the nation, according to RealtyTrac.
These so-called zombie properties are stuck in limbo, abandoned by homeowners and mired in foreclosure by the banks. Unable to be resold, the homes fall into disrepair. Squatters, crime, declining property values and, ultimately, demolition are the result, experts said.
Lawmakers and New York’s Attorney General are trying to clean up the mess, which experts blamed largely on banks dragging out foreclosures. AG Eric Schneiderman is funneling $33 million into relief efforts, including up to 20 land banks that will rehab or demolish abandoned homes.
Schneiderman will also reintroduce a bill that failed last session in the state legislature, seeking to compel banks to maintain zombie properties.
“First, I fought predatory lending, then subprime lending, then foreclosures, and now, I’m on to vacant and abandoned properties,” said Kirsten Keefe, a senior staff attorney with the Empire Justice Center in Albany. “It is the devolution of the crisis.”
Long Island and Queens are the epicenters of the zombie title problem in Metropolitan area, with roughly 3,700 homes in Suffolk, Nassau and Queens counties as of the second quarter, according to RealtyTrac.
In Suffolk County alone, zombie homes cover 266 acres of land or roughly one-third of the size of Central Park.
“Zombie foreclosures are affecting families in the hardest-hit areas,” said Maria DeGennaro, Long Island regional coordinator for the Empire Justice Center. “It’s hurting not just homeowners, but anybody living in the neighborhood, and it’s a terrible spiral.”
Many homeowners abandon their properties under the mistaken belief that the start of a foreclosure means the bank now owns the home — little knowing they are still on the hook for mortgage debt and taxes, consumer advocates said. Banks, meanwhile, have essentially been walking away from thousands of foreclosures deemed not worthwhile, a Reuters investigation published last year showed.
“Even though the housing market may look like it’s recovering, a lot of distress hasn’t been resolved,” said Daren Blomquist, vice president of RealtyTrac.
Free foreclosure assistance is available via Schneiderman’s consumer hotline at 1-855-466-3456.