New York’s Zombie Housing Law requires, in general terms, foreclosing mortgagees to maintain and secure 1-4 family residential real estate when the owner has abandoned the property. State or federally chartered banks, thrift institutions, and credit unions are exempt if their percentage share of the market falls below thresholds set in the statute. A bank must file for the exemption with DFS and the exemption is only good for one year. A new filing is required every year, before December 31, to be exempt for the following year. It has recently come to my attention that some banks have forgotten to file to keep their exemption and some banks that do not make residential mortgage loans are not bothering to file at all.

Today’s takeaway? If you qualify for an exemption, make sure that you make an exemption filing before year-end. We recommend that all banks should file for the exemption, even though they make no 1-4 family residential loans. You never know when that mortgage on the home of the president of a borrower taken in an abundance of caution results in a covered foreclosure action.

Today’s humorous interlude. I was giving a presentation on the Zombie Housing Law to the Banking Law Committee of the State Bar Association last year. The prior speaker discussed powers of attorney. He said that he was working on his presentation the night before when his young son walked by and saw the agenda. His son asked, “Dad, how come you have to speak about such a boring topic and the other guy gets to talk about providing housing for zombies?”