Families with reliable incomes "are being denied mortgage modifications because they have small outstanding debts," according to the office of Attorney General Eric Schneiderman.

New York Attorney General Eric Schneiderman on Monday renewed calls for the state legislature to address the problem of "zombie properties," or foreclosed homes that banks have walked away from to avoid the cost of maintenance.  

Schneiderman first took aim at the practice back in February, when he introduced a proposal that would put lenders on the hook for foreclosed properties soon after they are abandoned. Under current law, borrowers are required to pay for upkeep and taxes, even if a mortgage servicer has begun, but not completed, a foreclosure process.  

Under Schneiderman's renewed push to pass the bill, city councils throughout the state, including in Albany and Poughkeepsie, are scheduled to take up resolutions urging the passage of the attorney general's proposal. A similar resolution will also be introduced for consideration by the New York City Council.

"Zombie properties threaten neighborhoods across New York State, from big cities to small towns," the attorney general said in a press release. "Our bill will keep communities safer and lessen the burden of municipalities still struggling to recover from the housing crisis."

The issue has recently received attention from federal regulators. The Consumer Financial Protection Bureau in March announced plans to address the foreclosures, and has participated in several industry task forces addressing the issue. 

Related: Speeding Up Vacant-Home Foreclosures Could Save Big: Fed Paper

Subscribe Now

Authoritative analysis and perspective for every segment of the mortgage industry

30-Day Free Trial

Authoritative analysis and perspective for every segment of the mortgage industry