March 15, 2012
Local Governments Bearing Burden of Foreclosure Properties
86 Percent of Surveyed Localities Unaware of State Law to Combat Blight
The majority of municipalities in New York State were not aware of state laws allowing them to require foreclosing lenders to maintain vacant or abandoned properties even as 40 percent of them utilized local laws or ordinances to impose maintenance requirements, according to a survey conducted by New York State Comptroller Thomas P. DiNapoli.
"Foreclosure devastates the families affected and hurts our communities. Many cities, towns and villages find themselves on the front lines of the foreclosure problem in New York State," DiNapoli said. "When vacant properties in foreclosure aren't maintained, they contribute to neighborhood blight and perpetuate a decline in property values. Upkeep of these homes costs municipalities millions of dollars. It is often the municipalities with the greatest foreclosure problems that have been the least successful in recovering costs. Local governments need to be aware of legal remedies to force banks and financial institutions to step up and take care of their obligations on these properties."
In September 2011, the Office of the State Comptroller (OSC) surveyed 105 local governments in 23 counties outside of New York City with high foreclosure rates to gauge their level of awareness of Section 1307 in the Real Property Actions and Proceedings Law, which was passed in 2009. This law requires foreclosing lenders, such as banks, to maintain vacant or abandoned properties and grants municipalities the right to enforce this requirement in court. The intent of the law was to prevent neighborhood blight as vacant or abandoned properties fell into foreclosure status and remain unoccupied for an extended period of time.
The survey found that:
Nationwide, foreclosures increased 300 percent from 2006 to 2010, while in New York State, foreclosures increased by just over 100 percent during the same period. While foreclosures have begun declining, that statistic may be attributable to new laws that prolong the foreclosure process rather than an absolute decline in the number of foreclosures.
In 2011, Comptroller DiNapoli released two reports on foreclosures, one on foreclosure trends across New York State and another that focused on the issue on Long Island.
For a copy of the survey click here or visit: http://www.osc.state.ny.us/localgov/pubs/research/foreclosure.pdf