SN Servicing fined for failing to maintain New York zombie homes

Mortgage

SN Servicing must pay a six-figure fine for failing to maintain a pair of vacant homes in New York, the state’s financial regulator announced last week.

Back in 2016, the state of New York enacted “sweeping” new laws aimed at reforming the state’s foreclosure process and addressing the state’s issues with zombie homes.

Under the laws, lenders and mortgage servicers are required to report vacant and abandoned properties to the state and are required to maintain properties they believe to be vacant and abandoned.

If a lender or mortgage servicer doesn’t properly maintain a zombie home, as determined by the New York Department of Financial Services, the lender or servicer could face a fine of $500 per day, per property.

And last week, the NYDFS announced that it was ordering SN Servicing to pay a fine of $100,000 for failing to maintain two zombie homes in Gloversville.

According to the NYDFS, SN Servicing did not properly maintain the two properties for 230 and 232 days, respectively.

According to the NYDFS, at one property, SN Servicing failed to “properly secure the premises; to maintain the premises in good repair, structurally sound and sanitary; to maintain premises free of rubbish and debris; to keep all windows, doors and frames in sound condition, good repair and weather tight; and to keep all sidewalks, walkways, stairs, driveways, parking areas and similar areas in a proper state of repair and maintained free from hazardous conditions.”

At the other property, SN Servicing allegedly failed to “maintain the premises in good repair, structurally sound and sanitary; and to keep all sidewalks, walkways, stairs, driveways, parking areas and similar areas in a proper state of repair and maintained free from hazardous conditions.”

The NYDFS said that the properties in question were brought to its attention by the local fire department, which filed a complaint stating that both properties were vacant and not being maintained as required by law.

According to the NYDFS, the properties were not registered with the state as required by law, but the agency said that it able to identify SN Servicing as the responsible servicer. 

Then, in August 2017, the regulator notified SN Servicing that the properties were not in compliance with state law and required a response from SN Servicing within 14 days.

According to the NYDFS, SN Servicing claimed that the mortgagee on the properties would not authorize the servicing to maintain the properties. The NYDFS said that the servicer later claimed that the properties were not subject to the state’s zombie property laws because lien releases executed on the properties released the servicer of its obligations.

But the NYDFS stated that the lien releases in question were backdated, executed in April 2018 but backdated to July 2017. And according to the regulator, neither of the servicer’s claims actually held water and the servicer was required to maintain the properties.

As part of a consent order, SN Servicing is being fined $100,000 for failing to maintain the properties in question. Beyond that, SN Servicing is required to provide confirmation to the regulator within 30 days that all properties subject to the state’s Vacant and Abandoned Property Law have been registered with the registry of vacant and abandoned properties, are being maintained and that all quarterly filings have been made for each property. 

“Banks and mortgage servicers that do not uphold their responsibility to maintain vacant and abandoned properties will be held accountable by DFS,” NYDFS Superintendent Maria Vullo said in a statement.

Leave a Reply