New York using $9 million from RBS settlement to fight zombie homes

Mortgage

Continuing a fight that stretches all the way back to 2014, the state of New York is set to give its cities millions more in funding to address the glut of “zombie homes” that still blight many communities throughout the state.

Back in 2016, the state of New York enacted “sweeping” new laws aimed at addressing the state’s issues with zombie homes, homes that become vacant and abandoned during the state’s lengthy foreclosure proceedings.

Then, on several different occasions, the state provided cities and state land banks with millions of dollars to address zombie homes.

In each case, the money came from mortgage settlements with some of the nation’s largest financial institutions over their conduct in the run-up to the financial crisis.

In this latest effort, which the state calls “Zombies 2.0,” the state is giving as much as $9 million to cities to address housing vacancy and blight.

According to the office of New York Attorney General Letitia James, the money for these latest grants comes from the state’s $500 million settlement with the Royal Bank of Scotland in 2018 for the bank’s “deceptive practices and misrepresentations to investors in connection with the packaging, marketing, sale, and issuance of residential mortgage-backed securities” leading up to the financial crisis.

James’ office said the new funds will be used to “increase housing code enforcement, track and monitor vacant properties, and bolster legal enforcement capacity to ensure banks and mortgage companies comply with local and state law.”

These grants are a continuation of the state’s Zombie Remediation and Prevention Initiative, which provided nearly $13 million in grants to 76 New York municipalities in 2016.

According to James’ office, through the Zombie Remediation and Prevention Initiative, cities in New York have:

  • Improved data collection and analysis to track vacant and abandoned properties
  • Invested in new technology to better collect and analyze data to address the collective impact of vacant properties on neighborhoods
  • Created “Zombie Coordinators” and Taskforces to coordinate code enforcement activities and resources
  • Boosted capacity of code enforcement and legal departments to enforce relevant laws to hold lienholders accountable or seek remedies to improve housing quality
  • Connected at-risk homeowners to foreclosure prevention resources

James’ office said that it expects the grants to be announced in April.

“Far too many communities throughout New York continue to be blighted by zombie homes,” James said. “These abandoned houses significantly decrease property values and threaten the safety of surrounding neighborhoods. Zombies 2.0 will be a key resource for cities and town across the state to combat this nuisance, and make communities whole.”

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