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NY Zombie properties update

June 1, 2015

This post is overdue and is therefore too long. Since my last post there has been a lot of discussion of zombie foreclosures in New York. In fact, the same morning that I wrote the last post, the New York Governor Andrew Cuomo announced (via press release) that there was a deal with the banks. That deal is nowhere near as strong as the proposed legislation was but it does potentially alleviate a part of the problem.

See Newsday: “Banks, lenders agree to better maintain abandoned ‘zombie house’ properties in New York” by Carl MacGowan and Denise M. Bonilla:

“Zombie properties can bring down the economic health and safety of entire neighborhoods,” Cuomo said in the release.

As far as I can tell, the Governor’s “zombie properties” press announcement is the first time he has publicly said “zombie”. Does a press release count as saying it? I think for politicians it does. So here’s a zombie Governor Cuomo:

zombie governor cuomo

Incidentally, that same morning, major media also reported a “zombie” quote from Prince Harry. I am not sure how much those two people really have in common but it was a sort of humorous juxtaposition of two celebrity-sons of power, now both with their own varieties of current power (as in The Zombies song, “Time of the Season“: “what’s your name, who’s your daddy?” – zombie father’s day is coming).

zombie prince harry

The Prince’s quote is a reference to Africa, gardening, and his new baby niece, all three are zombie-related ideas. Price Harry hadn’t met his new niece Charlotte yet. He was just back from Africa, and involved in a gardening project, so zombies were on his mind, see Telegraph: “Prince Harry visits charity garden at Chelsea Flower Show“:

“This evening will be quite busy. I’ll probably be like a walking zombie. It will be great. I haven’t seen my grandma for a while, or my grandfather.

It’s usually the newborn’s parents who are the walking zombies (from sleep deprivation) or maybe that was the prince’s way of referencing the need to behave more appropriately when around the family. The bulk of the rest of this post will be about the New York foreclosure issue, however, it seemed noteworthy to mention the royal celebrity not just because of the coincidental timing but also because the royals are perhaps a kind of original western zombie power, made so nearly 800 years ago. Consider this great article in WSJ about Magna Carta: “Magna Carta: Eight Centuries of Liberty” by Daniel Hannan in which Hannan argues:

Magna Carta conceived freedom and property as two expressions of the same principle.

So now back to New York zombie properties. As I said above, I believe the Governor’s press release was his first quote referring to “zombie” anything. Given how hard the Attorney General has pushed this RealtyTrac vocabulary, I find it hard to believe that the Governor hasn’t said it yet before (at least in private?) but I haven’t seen it. Since this quote is merely a press release from his office, it’s possible he’s still never said it out loud.

When you are politician, does a press release count as him actually having said it? Fascinating research by Professor Drew Margolin at Cornell University, would likely consider this as Cuomo saying it for purposes of analysis of rhetorical followership. In terms of following the political power maybe that makes sense, and it seems clear that the RealtyTrac, the Attorney General and Newsday were successfully in pushing “zombie” into the Governor’s vocabulary. Cuomo’s office seems to be following that but this tells us very little about the Governor’s own consciousness. Does he think of abandoned properties as zombies, and if so what does he think zombies are? What are the implications that result from this metaphoric comparison?

Recall that humor can spread information but also has a danger of undercutting the message. Recall recent research about using zombies for spreading information. But consider this article in The National: “No business quite like the mockbuster business” by Agence France-Presse. Zombie mockery is where’s it’s at these days. The world prefers to pay attention to celebrity and humor.

The Associated Press version (available at FoxBusiness) begins:

New York regulators say 11 lenders have agreed to regularly monitor and maintain vacant properties in an effort to combat neighborhood blight.

It should say they have agreed in an effort to hold-off potentially painful legislation. It sure is an interesting coincidence that this press release came the same day that I jokingly suggested we could kill zombie properties with fire (in response to an arsonist who did just that). It looks like I wasn’t the only one thinking it was time for a better strategy. The legislation would have included significant fines on the banks. So instead, the banks and governor have reached a cozy deal to assuage the potential for populist fire. Sure, they’ll participate in these best practices to prevent avoid legislation with $1000 daily fines.

Mortgage Daily: “NY Foreclosure War Rages as Servicers, State Team Up” by Lisa D. Burden

WestFairOnline: “Lenders agree to register, maintain zombie properties” by John Golden

Legislators, don’t let up! There are still banks that will not voluntarily cooperate and more importantly, please remember: zombie foreclosures aren’t just vacant houses. We don’t just need legislation for the vacant homes but for all the potential foreclosures on people who were nearly destroyed by the financial crisis. Most of those people are not dead, they might not be home, the homes might be falling apart because maybe no one has any financial incentive to fix them, but these homeowners still exist somewhere. If it was a windfall for them, I’m sure they would return. Instead we just keep bailing out the banks and keep screwing the zombies.

At WBFO, Mike Desmond’s article: “Concerns raised over abandoned properties” reminds us:

It’s a result of the foreclosure crisis which began seven years ago as the residential housing market crumbled. The usual process is to foreclose. For lending institutions, the problem is that means they have to take over and maintain the buildings and many don’t want to.

So, since the banks don’t seem to want the houses, maybe we could just wipe the debt clean slate and give the homeowners back their homes. Those are the people we should want to help. Some towns claim they can’t find those people. First of all, the banks have their social security numbers. Second of all, give those people a right to their homes, unencumbered by the now unreasonable debt, and I bet they’ll all show up in droves. Right now, the owners can’t afford to sell and the banks don’t want to claim possession. It’s a stalemate until the houses crumble. Instead, before the house is a blight, make the banks negotiate with the homeowners before the house falls into disrepair.

It’s underwater, blame the banks. Their robo-signing exuberance bubbled without control. The bubble burst, government bailed out the banks but not the people. Expand HAMP and force the banks to negotiate to today’s market values. Instead, the banks can afford to hold assets on their books and not sell for centuries. While we wait, the pain is on the other neighbors. See in Syracuse at 2111 S. Geddes St., the neighbor is repairing the shared garage roof for $8,000, and in Niagara Falls at 560 College Ave. the neighbors take turns mowing the lawn, and in Cheektowaga at 18 Stratford Place, and in Newburgh at 187 Carson Ave.. These homes need new owners.

Meanwhile, recall from the previous post, Indiana is dealing with it somewhat differently, see further analysis in NMP: “New York and Indiana Take Different Approaches to Zombie Properties” by Phil Hall. And in Chicago: “Cook County’s Land Bank is betting on Austin” by Michael Romain.

I don’t know what the best solution for the future of the world is, but we need a solution. See Newsday: “Zombie home agreement with banks a good step, but state legislation needed, officials say” by Denise M. Bonilla and Carl MacGowan.

zombie denise bonilla newsdayzombie carl macgowan newsday

Newsday deserves some substantial credit for the popularization of “zombie houses on Long Island” with their exposé (along with News12 Long Island) of vacant house pictures about 2 months ago. They also provided significant coverage of the AG’s visit. It’s amazing how a little bit of news can sometimes stir action. Truthfully, we don’t need legislation if we can scare the banks to change their behaviors. It’s the behaviors that matter not the laws, but the law can last longer than the public reaction. Attention to an issue can sometimes be enough but we might still want to legislate to preserve this deal for the future. This issue is far from dead.

Some other possible solutions: eminent domain, community land banks, altering the foreclosure process.

MortgageDaily: “NY Town Using Eminent Domain on Zombie Properties

PostStar: “City to use eminent domain to pressure banks to clean up foreclosure properties

Buffalo News: “Land bank announces completion of first ‘zombie’ house renovation in Lackawanna” by Harold McNeil

RealEstateRama: “SUPERINTENDENT LAWSKY’S REMARKS ON REFORMING NEW YORK’S FORECLOSURE PROCESS

Wall Street Journal: “New York Regulator Seeks Faster Foreclosures” by Joe Light

zombie superintendent lawsky

zombie assemblyman hawley zombie assemblyman goldferber
And see:

WBTA190: “Hawley Supports Combat of “Zombie Properties”” by Evan Anstey

RochesterHomepage: “Rochester residents are fed up with “Zombie Properties”” by Ashley Zilka

NewYorkLawJournal: “State Banking Regulator Calls for Foreclosure Changes” by Joel Stashenko

BuffaloNews: “Continuing wave of ‘zombie homes’ necessitates action by State Legislature

NiagaraGazette: “EDITORIAL: We’re all for attacking problem of ‘zombie’ houses

NiagaraGazette: “EDITORIAL: It takes a village to fight blight

WGRZ: “State Legislation Would Crack Down on Zombie Homes

RockawayTimes: “Goldfeder: Zombie Properties to Get Some Life

Rockawave: “Phil Goldfeder: Zombie Hunter” by Harry Kane

TheForumNewsGroup: “Sweeping Plan to Thwart Rise in ‘Zombie’ Properties

Newsday: “Letter: Squatters are a community danger

Newsday: “Letters: New approach to foreclosed homes” – one letter tries to shift the blame from the banks back onto the homeowners and the legal system and the other advocates the other advocates using eminent domain.

WKBW: “Zombie Properties: Curse for suburbs. Will proposed law help?” by Ed Reilly

LancasterBee: “Depew looks to slay ‘zombie properties’” by Julie Halm

WestfieldRepublican: “Zombie property haunts Westfield residents” By Jeremy Izzio

Rome Observer: “Senate bill to address abandoned ‘zombie properties’

So, in conclusion to this long post:

WIVB: “Northtowns neighborhood fed up with “zombie” property” By Al Vaughters:

this zombie property: Stan can’t buy it, Donna can’t give it away, and the bank won’t take the title.

Shouldn’t the bank be looking to cut its losses?”

NextCity: “How the Zombie House Crisis Mutated and What Cities Are Doing About It” by Anna Clark:

The memorable “zombie” branding blurs some of the nuances of the technical term, says the Housing Partnership Network’s Danielle Samalin — vacancy does not necessarily mean a foreclosure is in limbo.

The result? Demoralized homeowners, the debilitating infection of blight on a community, and no easy way to push property into the hands of somebody who will take responsibility for it.

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From → economics

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