TROY – The Capital Region’s three largest cities have coordinated a series of lawsuits against Ocwen Financial Corp., a New Jersey bank that is said to be responsible for failed maintenance of 18 “zombie” properties, according to mayors of those communities.
In the foreground of a blighted, single-family home that’s been relegated to zombie status while amassing 57 state code violations, mayors for Schenectady, Albany and Troy Wednesday said their communities had sued Ocwen Financial Corp., and its subsidiary, PHH Mortgage, which they said had left the 18 homes in limbo by not completing the foreclosure process.
A zombie property is a vacant property facing mortgage foreclosure, but the bank or lender has not finished the foreclosure action. The financial institution has led respective owners to believe they had lost ownership of the properties and then failed to maintain them.
The state zombie law imposes a duty to inspect, secure and maintain vacant and abandoned properties on mortgages or their servicing agents.
Seven of the zombie properties are in Schenectady: 901 Bridge St., which has accumulated 35 code violations; 1223 Sixth Ave., which has amassed 25 violations: 1146 Van Velsen St., which has 22 violations; 910 Francis Ave., 20 violations; 17 Parker Road, 12 violations; 1087 Davis Terrace, 10 violations; 2305 Fairlee St., which has seven violations.
Dico Akseraylian, a spokesman for Ocwen Financial, issued the following statement:
“We are disappointed that the municipalities of Albany, Troy and Schenectady did not reach out to us in advance to address the properties in question.
“We have been working proactively and cooperatively with a number of municipalities throughout New York State for years on this important issue, including as a member of the Erie County Zombie Task Force in western New York. We are committed to helping homeowners and the communities we serve and have a long track record of helping distressed homeowners stay in their homes, which helps to prevent zombie properties,” Akseraylian said.
“When properties are abandoned, we work closely with our property preservation partners to maintain them in accordance with local ordinances and building codes so they do not become blights within their communities. We are carefully reviewing the lawsuits that we have just become aware of and will work to address any of the alleged conditions consistent with our rights and obligations.”
Gary McCarthy, Patrick Madden and Kathy Sheehan, the mayors of Schenectady, Troy, and Albany, respectively, spoke in front of 22 115th St. in Troy, a zombie property that had become a blighted on the quiet street across the street from a church, Madden said.
Madden said the three cities’ coordinated lawsuits, an enforcement of the state zombie law, was unprecedented.
“Zombie properties like this one started making their appearance after the mortgage crash some 13 years ago,” Madden said, adding that these properties languish, decay and present an ongoing problem in neighborhoods and communities.
Since 2019, following the passage of the state zombie law, the three cities have used grant money from the state attorney general’s office to hire additional enforcement officers and legal counsel for enforcement.
Madden said the cities came to understand that some mortgage lenders engaged in similar practices across multiple communities, and this triggered a conversation among enforcement officers to identify the largest mortgage lender with properties in all three communities: Ocwen Financial.
“The steps we are taking today will send a message to unresponsive financial lenders that our communities are serious about improving the quality of life in our neighborhoods, and we will hold you accountable,” Madden said, adding financial penalties secured as a result of the effort would be used to continue to fight against other zombie properties.
McCarthy said that banks, by redlining, had created problems as far back as 80 years ago that cities continue to deal with today.
He added that the three-city effort served to hold one particular entity responsible while “sending a message across our respective communities and across the state that we’re not going to tolerate this.”
The Schenectady mayor suggested that the bank’s actions were “almost criminal,” while Sheehan said the properties had become “magnets for trouble.”
“We are thrilled to have worked hand in hand with our partners in Schenectady and Troy to continue this transformative work,” Sheehan said.
The zombie law allows cities to sue mortgage servicers for $500 per code violation per day that the violation exists.
If successful, the 18 lawsuits could collectively net Albany, Schenectady and Troy more than $251,000 per day.
In the meantime, Schenectady officials say the city has had successes dealing with blighted properties in recent years.
Through the City Council, it has sold 141 vacant, city-owned properties, generating more than $3.5 million in sales revenue, since Jan. 1, 2020.
In the same timeframe, Schenectady’s tally of vacant buildings has been reduced by 237, from 804 to 567 buildings.
Of the remaining 567 vacant buildings, 185 are owned by the city.
In the same span, the volume of bank-owned buildings has shrunk from 55 to 33.
More than 225 complaints and violations have been issued to vacant buildings in Schenectady since January 2020.
The three communities will use grant money from the attorney general’s office for the complicated and tedious process of searching titles, and for legal counsel, salary reimbursement and foreclosure prevention outreach.
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