December 14, 2017
Contact: Richard Loconte, 212-709-1691
DFS FINES PHH MORTGAGE $119,000 FOR VIOLATION OF VACANT AND ABANDONED PROPERTY LAW AND REMINDS BANKS AND MORTGAGE SERVICERS OF THEIR OBLIGATIONS TO MAINTAIN “ZOMBIE” PROPERTIES
PHH Mortgage Failed to Maintain Property in New Lebanon, NY, for at Least 238 Days
Failure to Comply with Maintenance Obligations is Subject to Enforcement Action and a Fine of $500 for Each Day a Violation Exists
New DFS Guidance Reminds Banks and Mortgage Servicers of Their Obligations Under the Vacant and Abandoned Property Law
Financial Services Superintendent Maria T. Vullo today announced that the Department of Financial Services (DFS) has fined PHH Mortgage Corp. $119,000 for failing to maintain a vacant an abandoned property under DFS’s Vacant and Abandoned Property Law, which requires banks and mortgage servicers to fulfill certain maintenance obligations at “zombie” properties. The fine is part of DFS’s aggressive strategy to combat the blight of vacant and abandoned properties in New York State. In addition, DFS today issued guidance to remind banks and mortgage servicers of their responsibilities to maintain vacant and abandoned properties across the state, which includes reporting applicable properties to the DFS registry within 30 days of any material change to the status of a registered property.
“The announcement of this enforcement action puts banks and mortgage servicers on notice that if they do not maintain vacant and abandoned properties, they will be held accountable by DFS,” said Superintendent Vullo. “It is also crucial that banks and mortgage servicers provide DFS correct and timely information and updates on vacant and abandoned properties to ensure full compliance with the law and correction of violations. Anything less will be met with swift enforcement action.”
Today’s announcements follow the recent conclusion of statewide vacant and abandoned legislation information sessions conducted by DFS. More than 600 people attended one of the 10 DFS-led information sessions that were held to help local officials, including code enforcement officials, understand the legislation signed by Governor Andrew M. Cuomo in June 2016 to combat the blight of vacant and abandoned properties.
A DFS investigation found that PHH failed to maintain a property in New Lebanon, N.Y., for at least 238 days from the time the property was registered in the DFS registry as being vacant and abandoned. Under the Vacant and Abandoned Property law, mortgagees and servicers are obligated to inspect vacant and abandoned properties, address maintenance issues, and register properties that meet the statutory definition of vacant and abandoned with DFS. Banks and mortgage servicers are subject to a fine of $500 a day that a violation persists. This action builds upon the Department’s concerted efforts to hold banks and mortgage servicers accountable. DFS has worked with local government officials and banks and mortgage servicers to resolve 497 complaints regarding vacant and abandoned properties over the past year.
In the guidance issued today, DFS reminds mortgagees and servicers that under the law, they must update the vacant and abandoned registry within 30 days of any material change to the status of a registered property. A year after the law’s implementation, DFS continues to see errors in the reporting of applicable properties to the registry, including incorrect properties listed, as well as a lack of updated information on previously registered properties. A material status change includes the occurrence of any event that would remove the property from the requirements of the law, such as the completion of the foreclosure process, the demolition of the house, the property becoming real estate owned, or a lien release – and a transfer in the servicing rights. The registry enables transferee servicers to take over for an existing filing once the transferor has marked the file as inactive.
In addition, DFS’s guidance reiterates that the law applies only to one- to four-family properties that are subject to a mortgage. Vacant lots, commercial properties, real estate owned properties that are not otherwise subject to a mortgage are not covered by the vacant property law and are not to be listed in the DFS registry. These properties may be subject to local laws governing vacant and abandoned properties.
DFS also reminded mortgagees and servicers of their responsibility to register vacant and abandoned properties and submit quarterly reporting of compliance efforts to DFS after registering a vacant and abandoned home or lot.
A copy of today’s guidance can be found here.