"Abandoned Property Neighborhood Relief Act of 2014"; relates to the duty of the mortgagee or its loan servicing agent to maintain property secured by delinquent mortgage

Summary of specific provisions

Section 1 establishes the title of the Act as the "New York State Abandoned Property Neighborhood Relief Act of 2014."

Section 2 amends section 1307 of the Real Property Actions and Proceedings Law to: create a definition of "vacant and abandoned" residential real property; expand the existing duty of a mortgagee to maintain vacant residential real property to include pre-foreclosure "vacant and abandoned" residential property as defined in the bill, and to expand such duty to the mortgagee's loan servicing agent; establish a periodic inspection requirement for mortgagees and loan servicing agents to determine if residential real property subject to a delinquent mortgage is currently occupied; and make it unlawful for a mortgagee or loan servicing agent, or a person acting on their behalf, to enter residential real property that is not vacant or abandoned for the purpose of forcing, intimidating, harassing or coercing a lawful occupant thereof to vacate the property in order to render it vacant and abandoned.

Section 3 adds a new section 1307-a to the Real Property Actions and Proceedings Law to: require the Attorney General to establish and maintain a statewide electronic Vacant and Abandoned Property Registry that shall be accessible to local officials across the State; require mortgagees or their agents to promptly submit to the statewide Registry information about vacant and abandoned properties, including but not limited to the current name, address and contact information for the lender or servicer responsible for maintaining the property, whether a foreclosure action has been filed, and any updated material information when it becomes available; authorize a municipality wherein vacant and abandoned residential property is located to intervene as of right in a foreclosure action involving the property for the purpose of requesting injunctive relief to ensure the property is maintained in accordance with law and that the foreclosure action is timely prosecuted; require the Attorney General to establish and maintain a toll-free hotline that community members concerned about vacant and abandoned properties can call to report such properties and to obtain information relating to such properties, including but not limited to whether a specific property is listed on the Attorney General's statewide Vacant and Abandoned Property Registry and, if so, the identity of the mortgagee or loan servicing company responsible for maintaining the property; and authorize the Attorney General, and

any affected locality upon written notice to the Attorney General, to seek injunctive relief and/or civil penalties against mortgagees and/or their agents for violations of RPAPL sections 1307 and 1307-a.

Section 4 establishes an effective date of 180 days after the act shall have become a law.

Existing law

Section 1307 of the Real Property Actions and Proceedings Law currently requires a plaintiff in a mortgage foreclosure action who obtains a Judgment of Foreclosure and Sale involving residential real property that is or becomes vacant to maintain the property until such time as ownership of the property has been transferred through the closing of title in foreclosure or other disposition, and the deed is duly recorded

Justification

Vacant and abandoned residential properties securing delinquent mortgages fall into disrepair and harm neighboring properties and the surrounding community. These properties are a blight on neighborhoods because they are often boarded up, inhabited by squatters or used for criminal purposes. When a vacant and abandoned property is not maintained for an extended period of time, there is a decline in the community's real estate market and the state's property tax base. There is also an increased likelihood of crime in and around the property. There are instances of such properties being used by criminals to manufacture and/or distribute illegal drugs. Municipalities are often forced to expend taxpayer funds to prevent a vacant and abandoned property from becoming a public hazard. If a municipality is forced to care for a significant number of vacant and abandoned properties, its budget can be depleted quickly.

Current law, enacted in 2009, imposes a duty on plaintiff-mortgagees to maintain vacant residential properties only after a Judgment o f Foreclosure and Sale has been entered. Unfortunately, this law has proven inadequate to address the growing number of vacant and abandoned properties falling into disrepair across New York State survey in one jurisdiction showed that most vacant and abandoned properties were not subject to foreclosure actions and, if they were, the cases had not proceeded to Judgment of Foreclosure and Sale. In many instances, the plaintiff-mortgagee abandoned the foreclosure effort. In others, the plaintiff-mortgagee sought to vacate its own Judgment of Foreclosure and Sale, bringing the property outside of the existing maintenance requirement imposed on the plaintiff-mortgagee by statute. There is also evidence showing that current and former New York homeowners have been misled into believing they need to leave their homes earlier in the foreclosure process than they actually have to, resulting in even more vacant and abandoned properties.

In response to this growing threat to communities across New York State, the Abandoned Property Neighbor hood Relief Act of 2014 will ensure that homeowners are provided with early notice that they are legally entitled to remain in their homes until ordered to leave by a court and will require mortgagees and their loan servicers and agents to identify, secure and maintain vacant and abandoned properties much earlier in the mortgage delinquency timeline. It will also require

that they electronically register these properties with the newly-created Vacant and Abandoned Property Registry to be established and maintained by the Attorney General. The Registry, in turn, will provide a much needed and readily available source of information on vacant and abandoned residential properties to local officials throughout the State, and will be supplemented by a toll-free hotline that community residents can use to report suspected vacant and abandoned properties to the Attorney General and receive information regarding the status of registered properties, including the identity of the mortgagee or agent responsible for maintaining them.

Prior legislative history

New bill.

Fiscal implications

It is expected that there will be costs to the Office of the Attorney General for the establishment and maintenance of the statewide Vacant and Abandoned Property Registry and the toll-free community resident hotline established by the Act.

Effective date

180 days.