September 20, 2022
NEW YORK -- From abandoned to affordable, thousands of homes creating eyesores in city neighborhoods could soon be a beacon of hope in a tight real estate market.
CBS2's Lisa Rozner has more on "zombie homes" and has an exclusive look from Jamaica, Queens at a city program that's being expanded to turn them around.
For more than 10 years, Rosemary Gadson has watched a home on 170th Street fall apart. It has a damaged roof, and a cracked foundation.
"It just rundown, you know, and nobody's doing anything with it," Gadson said.
Records show it was sold in 2009, and possibly became a victim of the subprime mortgage crisis, much like a home nearby on 160th Street.
Many homes from that era -- 2007 to 2010 -- make up the zombie homes seen across the five boroughs.
State law defines a zombie home as one- to four-family homes that are abandoned and vacant, and 90 days or more delinquent on the mortgage, meaning they are in the foreclosure process, which can take years.
"It brings the values of other people's homes down," Gadson said.
Rozner saw one of 1,200 zombie homes in the city's zombie home database, but officials estimate there actually could be around 2,000.
Business Insider economy reporter Alcynna Lloyd said New York has the most in the country.
"Evictions are rising, as well as foreclosures," Lloyd said. "There are a lot of zombie homes, specifically in areas that are highly populated with people of color."
The New York state zombie law passed in 2016 creates an online database of zombie homes, and pushes the responsibility of maintaining the properties to mortgage holders. If they don't, they can be fined up to $500 per day by a municipality.
"You have a situation where the lender is not getting any interest payments, debt service payments, and now you're asking them to fix up and maintain a home that they don't have title to," said Sam Liebman, a real estate expert.
"Now the bank has to get the title to that property before they can fix it up. So now they have to go through the court system and the court system is backed up. One solution would be to if a court document doc says zombie house expedited through the system. So we can get these houses back into service."
New York City has reached a milestone, recouping over $1 million in penalties.
Chris Servidio of the Department of Housing Preservation and Development showed CBS2 examples like chipped paint, detached structures, and an unintended entry way that could attract critters.
"Typically, we will collect between $100 and $200 per day," Servidio, HPD Deputy Director of Tenant Engagement and Special Projects, said.
After being fined nearly $20,000 over a two-year period, HPD showed CBS2 how the lender transformed a home on 189th Street, boarding up windows, installing a padlock, and posting a sign on the home indicating who is in charge of the property.
The enforcement program started out as a pilot in 2017, and HPD told CBS2 exclusively it's being made permanent.
The long-term goal is to acquire and bring the zombies to life, so low and moderate income New Yorkers can buy them.
"We're directly engaging with those lenders to talk through either different types of donations or low cost sales to our different nonprofit partners," said Chantella Mitchell, executive director the HPD Office of Development's Home Ownership Initiatives.
She's referring to partners like Restored Homes, which acquired a cluster of homes around 105th Avenue. The previous owners took out federal loans, but couldn't pay.
Salvatore D'Avola, executive director of Restored Homes, showed Rozner one of them.
"There will be a three-bedroom, one and a half baths on this floor," he said.
In a few months, the two-family home will be available for almost $640,000 through an affordable housing lottery HPD will administer. That's a little more than $200,000 below market rate according to Department of Finance records.
"When is the last time you did a sale?" Rozner asked D'Avola.
"Two years ago. We had over 2,000 applicants for that cluster of homes, 23 homes," he said.
Another one ready to moved is priced at almost $475,000, close $200,000 below market rate. Yvonne Berrios has lived next door for a decade.
"We moved in, bought the house, and then it got vacant -- bad, bad, bad, bad," Berrios said. "Before they fixed it, we had drug addicts coming."
Searching for several years, veteran Anthony Coker won the lottery in 2019. He now owns a one-bedroom Mitchell-Lama co-op in the Bedford-Stuyvesant section of Brooklyn.
"I have stability, so I know that I won't have to move again," Coker said. "I'm able to walk to work. I'm able to, you know, see people who have raised their families in my community."
And he's helping families stay in their communities, assisting them with applications for the upcoming home ownership lottery through the nonprofit Restoration Plaza.
"We're already seeing that the people who grew up here in Bed-Stuy, in Brooklyn, central Brooklyn, a lot of them are moving out, especially families of color," Coker said.
Gadson said she dreams of owning.
"I always pass by and look at it and say, 'I would like that house,'" Gadson said, adding, "because this is a good neighborhood. The churches are here. The people are nice."
And it may just be a matter of time before the city turns blight into light.
The city says zombie homes make up less than 1 percent of multi-family homes in New York City, but with planned expanded enforcement, that number could grow.
Christina Wley, the executive Director of the New York Mortgage Bankers Association (NYMBA), told CBS2, "NYMBA applauds the State of New York for leading the way in standardizing vacancy and abandonment determinations, property maintenance expectations, and vacant, mortgaged-property registrations at the state-wide level through the 2016 Zombie Laws. Still, there are opportunities to improve their impact and application.
"The foreclosure process in the State of New York, one of the longest in the country, remains a significant concern of the NYMBA and its members. Although the 2016 Zombie Laws created the ability to expedite the foreclosure of vacant and abandoned properties, the State's court system has not adopted a consistent procedure to move these cases, lessening the intended benefit. Despite adhering to the property maintenance requirements of the 2016 Zombie Laws, as well as mortgage investors and insures such as Fannie Mae, Freddie Mac, and HUD, protracted foreclosure time frames cause unnecessary detrimental effects to properties, neighborhoods, and communities.
"NYMBA remains willing and eager to work with all stakeholders to explore opportunities to improve the foreclosure process and the impact of the 2016 Zombie Laws to better our communities across New York State."
The New York State Mortgage Bankers Association said the program would be more beneficial if the state's court system expedited the foreclosure process. Right now, it says it's a "significant concern" that it takes longer in New York than most other states.