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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:

  • 86 percent of respondents were not aware of the protections afforded by Section 1307, but 40 percent of local officials agreed that homes in foreclosure were negatively affecting property values in their communities.
  • 10 percent of municipalities surveyed in both the western New York and downstate regions (Erie, Niagara, Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk, Sullivan and Westchester Counties) were aware of the authority of a municipality under Section 1307 prior to receiving the survey.
  • 35 percent of respondents reported having performed maintenance on foreclosed properties, with an average cost of $924 per property. Applying this average across all municipalities surveyed, OSC estimates the cost to be in the range of $15.1 million to $28.6 million spent on maintaining foreclosure properties in 2010.
  • 40 percent of respondents already utilized local laws or ordinances to impose maintenance requirements on foreclosed properties. This figure was higher (55 percent) in central upstate counties such as Broome, Cayuga, Cortland, Livingston, Monroe, Onondaga and Ontario but lower (22 percent) in eastern upstate counties such as Albany, Greene, Jefferson, Montgomery, Rensselaer and Washington.
  • Two-thirds of municipalities indicated they had fully recovered the costs of property maintenance by using local laws or ordinances. The remaining respondents partially recovered costs or failed to recover any costs.
  • Municipalities reported performing removal of rubbish and abandoned vehicles, securing windows and doors or boarding up windows, cleaning gutters to prevent water damage and undertaking emergency demolition of unsafe structures. Some larger cities indicated they are maintaining more than 1,000 properties.
  • Greater communication and outreach is needed regarding the provisions of Section 1307, particularly in those areas that have been hit hard by foreclosures.

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:



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