Ocwen, PHH reviewing alleged zombie property violations in 3 cities

Ocwen Financial and its subsidiary PHH Mortgage on Monday were reviewing allegations that they had not completed foreclosures in a timely manner on 18 abandoned properties in New York, the top state for so-called “zombie” real estate issues.

Albany, Schenectady and Troy have coordinated legal actions against Ocwen and PHH under New York’s zombie property law, according to a press statement posted online July 28. Under the law, a civil penalty up to $500 may be issued for each day a violation exists on an abandoned property. New York enacted the legislation a few months before the COVID-19 pandemic hit the U.S., in December 2019. The properties involved have a total of 502 state building code violations, the cities allege.

While foreclosure moratoria being phased out have prohibited action on occupied single-family properties, they generally allowed some exceptions for abandoned properties, or at least ones in progress prior to the pandemic. Recently, national zombie property volumes jumped almost 6% quarterly and 21% annually, but the number in New York, at 2,052, is down from the 2,226 seen at the time New York’s law was enacted, according to Attom Data Solutions.

Ocwen declined to comment on the details of the litigation or whether the foreclosure ban had any bearing on it or not, noting that it had just begun to review it.

“We are disappointed that the municipalities of Albany, Troy and Schenectady did not reach out to us in advance to address the properties in question,” the company added. “We have been working proactively and cooperatively with a number of municipalities throughout New York State for years on this important issue, including as a member of the Erie County Zombie Task Force in western New York.”