Business

Thousands of NYC residents still living in foreclosed homes

Thousands of metro-area residents are still living in their foreclosed homes, even after ownership has reverted to the bank.

In its first look at the phenomenon, foreclosure research firm RealtyTrac estimates that more than half of the 4,475 metro New York bank-owned properties are still occupied by the people who used to own them.

Seventy percent or more of bank-owned properties in the five boroughs are being lived in by their former owners. Nationwide, the total is 47 percent.

Hedge funds have been hungry for real estate owned (REO) homes, which are taken back by the bank after failing to sell at a foreclosure auction.

RealtyTrac began tracking REO occupancy after receiving requests to do so from investors who are apparently eager to acquire such properties but not for the hassle of evicting former homeowners.

New York’s relatively small REO numbers reflect a long time line for foreclosures, not an end to the crisis — or the misdeeds of banks.

Just last week, New York state Attorney General Eric Schneiderman hit Wells Fargo with a lawsuit alleging failure to comply with the National Mortgage Settlement.

“You have this very dysfunctional foreclosure process, with problems created by banks,” said Daren Blomquist, vice president at RealtyTrac.

But there are some mutual benefits to the non-eviction scenario. Banks avoid the costs of maintaining a property, while former homeowners live rent-free.

But since the former homeowner still faces eviction, foreclosure defense attorney Linda Tirelli recommends making a deal to leave the home in good condition by a certain date, in exchange for some cash to cover moving costs.