Real Estate
homes cause property values to drop
www.qns.com I LIC COURIER I JANUARY 2018 17
BY ANGELA MATUA
AMATUA@QNS.COM
A new report released by members of
the state Senate found that bank-owned,
foreclosed homes in Queens have caused
property values to drop $17.9 million be-cause
financial companies failed to properly
maintain the properties they acquired.
“Nightmare Neighbors: How Badly
Maintained Homes Damage Neighbor-hoods”
was released on Dec. 18 by the
Independent Democratic Cause (IDC), an
eight-member group in the state Senate.
The report identified hundreds of bank-owned
properties in Queens, Brooklyn
the Bronx and Staten Island to analyze
how these foreclosed homes affected
surrounding neighborhoods.
After the housing market crash in the
mid-2000s, Queens saw an increase in
“zombie properties.” In 2009, then-Gov-ernor
David Paterson signed a law that
made financial institutions responsible for
maintaining a property until it was trans-ferred
to another owner.
According to the report, however, banks
circumvented this law by declining to ac-cept
ownership of the properties after the
foreclosure process, leaving it up to home
owners to maintain them. In 2016, the state
passed a law to give municipalities and the
Department of Financial Services (DFS)
power to enforce the 2009 law and cre-ated
a registry for these zombie properties.
For this report, the IDC chose to look
at the state of bank-owned properties
that have been abandoned to analyze
the effects on surrounding homeowners.
They dubbed these properties “nightmare
neighbors.”
Staff members identified 336 bank-owned
one- to four-family homes in the
four boroughs and found that 136 had
open violations listed on the Housing Pres-ervation
and Development (HUD) and
Department of Buildings (DOB) websites.
The 136 properties have 2,610 open
violations and the report estimates that the
homes are responsible for lower property
values of homes nearby by $53.44 million
citywide.
Queens, with 155 bank-owned proper-ties,
had the largest number of these prop-erties
with open violations. The report found
that 50 of the 155 bank-owned properties
had a total of 576 open violations.
A spokesperson for state Senator Jose
Peralta said members saw trash piled up in
backyards and lawns, boarded up windows,
chained doors and overgrown vegetation.
The analysis found that 2,864 one-
to four-family properties in the borough
have been impacted by these nightmare
neighbors and have lost about $6,263 in
value. In total, the bank-owned homes have
caused more than $17.9 million in house
value depreciation in Queens.
“The mortgage crisis wreaked havoc
across my district and the rest of the state
and the country, a tsunami that left an
adverse effect in so many of our hard-working
and immigrant communities,” said
Peralta, who represents Jackson Heights,
Coronaand East Elmhurst. “Foreclosed
homes became eyesores in our neighbor-hoods
when banks failed to maintain their
properties, not only affecting the property
values but also creating health and public
safety risks. Banks have to be accountable,
and this is why financial institutions should
face stiffer penalties in order for us to stop
the despair of our communities.”
The financial institutions with the most
open HPD and DOB open violations in
the borough were responsible for 74.8
percent of all the violations in Queens.
They included Wilmington Savings Fund
Society, US Bank and Wells Fargo.
The 50 bank-owned properties with
violations in Queens were owned by 16 dif-ferent
banks. The top financial institutions
that owned most homes were responsible
for $11,461,765 of the total depreciation
recorded in the borough. In total, 32 of the
50 homes were owned by these banks.
The report also found that these night-mare
neighbors greatly impacted minority
communities and low-income communities.
Bank-owned homes in this report were
located in 76 ZIP codes citywide and 46
of the total were categorized as minority
communities while 26 were identified as
low-income communities.
In the 76 ZIP codes analyzed, 55 had
bank-owned properties with open viola-tions.
Forty-six of the 55 ZIP codes are
considered minority communities, and 21
are low-income communities.
The IDC, led by state Senator Jeff Klein,
is proposing legislation to hold banks ac-countable
for these nightmare neighbors.
They argue that the 2016 law should apply
to bank-owned properties and that the
Department of Finance registry should
include the properties in the report and
others like them.
“Thus, the DFS registry would contain
all vacant and abandoned properties in
which the bank has the duty to maintain,
both prior to the judgment of foreclosure
and after the judgement of foreclosure
before the bank sells the property,” the
report read.
The proposal would also add monetary
fines to the 2009 law. Under current law,
a municipality can file a lawsuit against a
bank for failure to maintain the property.
If the municipality wins the lawsuit, the
bank would be required to reimburse the
municipality for expenses incurred from
maintaining the property.
The new bill would also allow DFS to
bring fines of $500 per day per violation.
The violations include a failure to maintain
the property post-foreclosure or failing
to report the bank-owned property to
the registry.
In addition, the IDC is asking for $5
million to allow DFS to hire code enforce-ment
officers to track and monitor vacant
and abandoned properties to monitor their
compliance.
“Queens is unfortunately all too familiar
with the damage done to communities by
poorly maintained bank-owned houses,”
said state Senator Tony Avella, who rep-resents
Flushing, Whitestone, Bayside
and College Point. “In my district alone,
I seem to be in contact with the Sanita-tion,
Buildings and Health departments
monthly to ask for their help cleaning
up some of these properties. Residents
are growing tired of these bank-owned
properties that lower the quality of life in
our communities.”
