According to Kathleen Lynch, Esq., of the WNY Law Center, legislation passed on December 15th by Governor David Paterson holds great provisions, including expanding court-based settlement conferences to all home loans. This, says Lynch, enables homeowners to face banks in court and work out a modification under court supervision.
Lynch goes on to say that the other huge victory for cities all over, and especially Buffalo, is the foreclosure maintenance provision. As of April 15th, any foreclosing plaintiff that goes as far as getting a judgment of foreclosure on a property, must assume responsibility for the maintenance of the property.
“If lenders do not want to assume responsibility of maintaining the property or selling it,” Lynch says, “they ought to think carefully about initiating a foreclosure, perhaps see if they can work something out.”
The law is specifically designed to address the serious problem that occurs when lenders initiate and then abandon foreclosures and leave the properties in limbo, causing them to deteriorate and become a nuisance and costly to neighbors and the municipality.
For example, Lynch points to the case of 459 Hopkins, a house for which a foreclosure was filed on January 5th, 2007. It proceeded fairly quickly to judgment which was obtained on May 22nd, 2007, yet the bank never took back the deed, sold the property, or took care of it.
“The property languished and became a huge problem for the community,” says Lynch, “and the mayor’s office had to send in the Clean Sweep team and even dig up part of the lawn because of problems with pipes bursting.” After that, the house went to through the city tax auction for unpaid taxes.
Housing Specialist at Cazenovia Community Resource Center Matt Fisher says this was a case of a happy ending, when the house was purchased at auction. “You can’t go inside the house prior to auction, but this was bought for $11,000, more than I thought it would get, and it’s going to cost a good $40,000 to make it livable.” Fisher says that the bank had taken the house and then let it languish for 2 years. “It was gutted by gangs, there’s grafitti on the side – a real nightmare on this suffering street on the outer edges of South Buffalo.”
Fisher, whose job was created through Councilman Mickey Kearns, using his discretionary budget, says he does all he can to advocate for neighborhoods like this, and the governor just made his job easier. “Now that this legislation has passed,” says Fisher, “Housing Court Judge Hank Nowak has some teeth to go after the banks that don’t secure, market, or maintain these houses.” (See the South Buffalo Neighborhood Accountability Board’s Facebook page for more.)
Lynch says that in order to get to the judgment stage, the foreclosing entity has to expend significant energy and resources to proceed through the legal process. “Very often, the previous owner has left the property and assumes it has been taken by the bank,” Lynch explains. “Sometimes, they are hauled into housing court to address the violations, when they left the property months or even years before, thinking they no longer owned it. The lenders/investors on the loan lose too when there is a deteriorating asset that loses value as time goes on.”
This law, according to Lynch, is a fair way to address this problem, since she believes it’s unfair to expect taxpayers and municipalities to assume the costs of dealing with these properties – not to mention the burden on the neighbors who have to deal with deteriorating properties, vandalism, and decline in their own property values due to abandonment of the properties.
See a full article detailing the law here.