PHH Mortgage was the first mortgage servicer to be fined by the New York Department of Financial Services for failing to maintain a “zombie” property.
And other servicers were warned that more fines could be on the way.
“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 Maria Vullo in a press release.
“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.”
PHH has not returned a request for comment.
The fine was issued just one week short of the first anniversary of the Vacant and Abandoned Property Law’s enactment on Dec. 20, 2016. The law requires servicers to register with the DFS any properties that meet the statutory definition of vacant and abandoned. Servicers can be fined $500 a day for each day an alleged violation persists.
PHH was fined $119,000 for failing to maintain a property in New Lebanon, N.Y., which is 26 miles east of Albany. The servicer allegedly did not maintain the property for at least 238 days after it was placed on the DFS registry.
In conjunction with the fine, the DFS issued guidance reminding servicers that they need to inspect one-to-four family properties secured by a delinquent mortgage. Servicers are required to submit quarterly compliance reports to the regulator.
In addition, servicers are not updating vacant property registrations in a timely manner, the DFS guidance said. Servicers have 30 days to notify the department of any material changes to the status of a property, including events that would remove the property from the registry such as the completion of a foreclosure.
But properties that are not eligible or removed from the registry are subject to local laws that govern vacant and abandoned properties.