Company fined for ‘zombie’ properties
GLOVERSVILLE — A mortgage servicing corporation has been fined $100,000 by the state Department of Financial Services for failing to maintain and register two abandoned city properties.
DFS Superintendent Maria T. Vullo announced in a press release the state agency has fined SN Servicing Corp., a state registered mortgage loan servicer headquartered in Baton Rouge, $100,000 for failing to maintain and register two abandoned properties in Gloversville under the state’s Abandoned Property Relief Act.
The 2016 law requires banks and mortgage servicers to assume certain inspection, maintenance and registration responsibilities in connection with vacant and abandoned residential properties.
The release from the DFS states that the two city properties were not maintained for 230 and 232 days respectively and SN Servicing did not respond to notices regarding the violations within 14 days as required.
Failure to comply with maintenance obligations is subject to enforcement action and a fine of $500 for each day a violation exists.
“Banks and mortgage servicers that do not uphold their responsibility to maintain vacant and abandoned properties will be held accountable by DFS,” Vullo said in a prepared statement. “Under New York’s Vacant and Abandoned Property Law, anyone can report a vacant and abandoned property to ensure full compliance with the law and the correction of any violations to help combat the blight of zombie properties on New York neighborhoods.”
According to a consent order signed by DFS and SN Servicing, the properties were brought to DFS attention in August 2017 in a complaint filed by the Gloversville Fire Department stating that two houses in the city were vacant and abandoned and were not being maintained in accordance with Abandoned Property Law.
DFS determined the properties were not registered on the Vacant Property Registry and through independent research identified SN Servicing as the servicer responsible for the properties.
Complaints from the fire department were forwarded to SN Servicing by DFS, but an inspector sent by the state agency to check on the two properties found the corporation took no action to address the maintenance violations. The mortgages on the properties were extinguished through a tax foreclosure proceeding on Jan. 1, 2018.
According to DFS, SN Servicing claimed to the state agency that the loan provider on the property would not authorize the required property maintenance, later claiming the properties were not subject to the requirements due to lien releases executed in April 2018 that were backdated to July 2017.
DFS stated that neither of these reasons excuse SN Servicing of its failure to maintain the properties.
Maintenance violations included failure to properly secure the premises; to maintain the premises in good repair, structurally sound and sanitary; to maintain premises free of rubbish and debris; to keep all windows, doors and frames in sound condition, good repair and weather tight; and to keep all sidewalks, walkways, stairs, driveways, parking areas and similar areas in a proper state of repair and free from hazardous conditions.
The current condition and ownership status of the two properties could not be determined as DFS declined to provide the addresses of the two properties when contacted and Gloversville Neighborhood Quality Administrator Joseph Kadle was unable to identify the properties by the available information. SN Servicing did not immediately respond to a request for information.
In addition to the $100,000 fine, under the consent order SN Servicing will provide confirmation to DFS that all properties subject to the requirements of the Vacant and Abandoned Property Law have been registered, are being maintained and that all quarterly filings have been made for each property. SN Servicing will provide the same confirmation to DFS on a bi-monthly basis, along with inspection reports and maintenance records.