Hempstead adopts law for banks to pay for zombie home upkeep

Banks and lenders will have to post a $25,000 security deposit each time a home in the Town of Hempstead goes into foreclosure.

Town Board members on Tuesday voted unanimously on the measure aimed at funding the repairs and upkeep of so-called zombie homes and preventing vacant homes from falling into disrepair.

The measure is one of the highest penalties for banks on Long Island where communities have spent nearly $3 million for zombie home cleanup amid worries that the deteriorating homes lowered neighbors’ property values.

Banks would be required to post the $25,000 deposit upfront for the town to use for lawn care, graffiti removal, snow removal and home maintenance.

The town is requiring banks to cover the fees rather than the past method of rolling upkeep costs to the foreclosed homeowner’s property taxes years later. Town officials said they hope the measure urges banks to maintain homes or sell them more quickly.

“It puts the burden on the mortgage lender to do what it has to do to make the repairs,” Town Attorney Joe Ra said.

Nearly all Long Island towns collect the fees through taxes, but Hempstead Town Supervisor Tony Santino said the new measure follows other municipalities in upstate New York.

Banks that don’t comply with the $25,000 payment requirement would be fined between $500 and $1,500 a day.

Officials with Bethpage Federal Credit Union, one of Long Island’s largest home lenders, declined to comment on the law Tuesday.

Gov. Andrew M. Cuomo and the state Department of Financial Services reached an agreement last year with 11 banks to better maintain foreclosed properties. Some of the largest mortgage lenders agreed to “adopt a set of best practices” and timetables for vacant home inspections.

Residents at Tuesday’s town board meeting supported the measure and angrily spoke against banks neglecting foreclosed homes.

Martha Ann Bradley of Uniondale said there are 67 homes under foreclosure in Uniondale that are subject to theft of metals and copper wire. She said the neglected vacant homes are driving out homeowners who want to stay in their community.

“To watch these houses boarded up and blighted is a disgrace,” Bradley said. “These banks need to take responsibility, not just the money. They don’t care. This is a disgrace for the neighbors.”

Other residents expressed concern that the new law could lead to litigation against the town by banks and lenders.

The town can also use fees for home demolition and collect additional fees from the banks to cover costs that exceed $25,000.

By John Asbury

john.asbury@newsday.comJohnAsbury

John Asbury is a breaking news and general assignment reporter. He has been with Newsday since 2014 and previously worked at The Press-Enterprise in Riverside, California.