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Sun. Jun 23rd, 2024

New York, NY — Senator Jose Peralta and Senator Tony Avella today released a new investigative report on the impact of poorly maintained bank-owned properties on communities. The report, “Nightmare Neighbors: How Badly Maintained Homes Damage Neighborhoods,” found that these dilapidated homes cause nearly $54 million in depreciation for surrounding homeowners throughout the city.

New legislation was also introduced to stiffen penalties for banks that fail to maintain their properties.

The report found that Queens had the highest concentration of bank owned properties in the five boroughs, with 155 bank owned properties, of which 32.2 percent, or 50, were found to have a combined 576 open violations with HPD and DOB.

“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. Foreclosed homes became eyesores in our neighborhoods 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,” said Senator Peralta.

“Queens is unfortunately all too familiar with the damage done to communities by poorly maintained bank-owned houses. In my district alone, I seem to be in contact with the Sanitation, 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. New Yorkers deserve better. Shame on these financial institutions for allowing this to happen to our New York communities,” said Senator Avella.

Based on the findings, over 8,000 properties have been impacted by these bank-owned properties, with an average property value loss of $6,368.

Of the 26 financial institutions that own properties, the total depreciation of the top five worst violators city-wide was over $32 million.

Financial Institution Number of Properties Held Total Depreciation Percentage of Total Depreciation ($53.4M)
US Bank 24 $7,720,066.00 14.4%
Wells Fargo 14 $6,189,841.00 11.6%
Fannie Mae 18 $6,104,268.00 11.4%
HSBC 10 $5,631,212.00 10.5%
Wilmington 15 $5,515,972.00 10.3%

Fifty of the bank-owned properties in Queens had open violations. This is out of a total of 155 confirmed bank-owned properties in Queens, or 32.3% of all confirmed real estate-owned properties in Queens. There are currently 576 open violations. The five financial institutions with the most open HPD and DOB violations accounted for 74.8% of all the violations.

Financial Institution Open HPD and DOB Violations Percentage of Total Violations in Queens
WILMINGTON SAVINGS FUND SOCIETY 97 16.8%
US BANK 95 16.5%
WELLS FARGO 86 14.9%
MORGAN STANLEY 77 13.4%
BANK OF NEW YORK MELLON 76 13.2%

Ultimately, the research and analysis concluded that one-to-four family properties in Queens have lost approximately $6,263 in value, and in total, these bank-owned homes have caused over $17.9 million in house value depreciation.

Borough # of Bank-owned Properties with violations Average Median Property Value Average Depreciation Rate Per Property Properties Impacted Property Value Depreciation
Queens 50 $481,769 $6,263 2,864 $17,940,775

The 50 bank-owned properties with violations were owned by 16 different banks. The top five financial institutions were responsible for $11,461,765 of the $17,940,775 in total depreciation recorded. This is 64% of the total depreciation caused by a total of 32 properties out of the 50 identified in Queens.

Financial Institution Number of Properties Held Total Depreciation Percentage of Total Depreciation (17.9$M)
FANNIE MAE 8 $2,951,930.00 16.5%
WILMINGTON 8 $2,750,846.00 15.3%
WELLS FARGO 6 $2,370,506.00 13.2%
US BANK 6 $1,696,719.00 9.5%
BANK OF NY MELLON 4 $1,691,764.00 9.4%

In 2016, the Independent Democratic Conference led the effort to combat “zombie” properties, those caught in the legal limbo of the foreclosure process that have been left vacant and abandoned. The state Department of Financial Services now maintains a registry of all zombie owned properties, and can impose fines on banks of $500 a day for failure to maintain.

To deal with banks that own homes through foreclosure, Senator Klein and the members of the IDC propose expanding the registry to include bank-owned homes so that state and local municipalities can more easily track these properties. Bank-owned homes, under the new proposal, would also face $500 a day fines.

In order to better enforce these laws, Senator Klein and the members of the IDC propose $5 million for DFS code enforcement agents and attorneys to hold banks accountable to the $500 a day fines.

“As an organization dedicated to preserving New York communities, Mobilization for Justice applauds the Senate for examining the detrimental impact on New York communities caused by the failure of financial institutions to maintain the properties they hold,” said Linda Jun, senior staff attorney at Mobilization for Justice. “To advance the stability of New York neighborhoods and protect them from harm, there must be greater accountability for these financial institutions. Mobilization for Justice strongly supports the IDC’s recommendations to increase registration, penalties, inspections, and enforcement to ensure that financial institutions no longer allow their properties to fall into disrepair.”

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