Occupied as recently as last summer, today the house sits vacant and derelict, with garbage everywhere, and boards covering windows and doors.

No one claims to own it. The owner and tenants left after the bank started to foreclose, but the bank doesn't want anything to do with the house, either.

It's a situation all too familiar to neighbors and community leaders throughout Buffalo's low-income communities. They've seen banks start to foreclose on a house, only to back away at the last minute after realizing the decrepit condition of the property.

But that's changing. Through a Housing Court ruling last week and proposed city legislation, Buffalo is demanding that banks start taking responsibility for maintaining homes that are left vacant and derelict when lenders initiate foreclosure but don't follow through to the end.

The effort is being applauded by housing and neighborhood advocates, who otherwise watch helplessly as neighborhoods decline, inspectors write up housing code violations in vain, and homes are demolished or ignored.

"It is setting a precedent, especially in New York State," said Michele Johnson, an East Side housing activist and Housing Court liaison. "Banks have been notorious in walking away from these properties. It will make them less likely to let the property sit and rot knowing that we're going to go after them."

There are an estimated 39,000 vacant homes throughout the region, with nearly half considered to be abandoned; about 20,000 of them are in Buffalo, which has a 17 percent vacancy rate, according to the U.S. Census Bureau.

No one knows exactly how many of these houses are the result of partial foreclosures, but at least 57 percent of foreclosures are not completed, according to a study by Housing Court, which handled about 700 bank-initiated foreclosures last year.

The problem stems from lenders, generally from out of town, starting routine foreclosures on properties and even obtaining judgments, but never taking title or selling the properties at foreclosure sales. The lenders balk after their appraisers look at the properties and determine it is not worth foreclosing and getting stuck with them.

But the banks, which have already told the owners to leave, never tell them that they have dropped the foreclosure process and forgiven the loans. The owners are often surprised to be dragged months later into Housing Court, thinking they no longer own the homes.

The city has tried to hold the banks accountable by asserting that they are in control of the properties. Housing Court levies fines, but the banks often ignore them.

Fed up, Judge Henry J. Nowak on Friday took a new step. In a ruling involving German banking giant Deutsche Bank AG and its U.S. subsidiary, Bankers Trust Co., the judge refused to allow the banks to evict residents in two homes until they pay a total of $133,000 in Housing Court fines on nine other properties dating back to January 2004. Together, the two institutions have the most violations of any lender.

The judge used a 1978 state law that established Buffalo Housing Court and gave it the unique authority to use "any remedy, program, procedure or sanction" under the law to "protect and promote the public interest."

"They basically thumb their noses at the court, and then they come into the court and ask for help on the other properties," said Harvey Garrett, executive director of West Side Community Collaborative and another Housing Court liaison. "The judge said ‘no.' "

Meanwhile, city legislation has been introduced that would mimic a proposed Cleveland ordinance, mandating that lenders file a notice of foreclosure with the city, not just the county and court.

The notice must include the name and contact information for a person responsible for maintaining the house and must be updated if the property should become vacant. Failure to comply is a misdemeanor. The filing fee is $60.

Officials plan a special meeting of the Community Development Committee at 2 p.m. April 19 at City Hall to discuss it, said Paul Wolf, the Common Council's chief of staff.

Officials are also working on proposed state legislation to require lenders to complete foreclosure within 60 days. About 35 states already have such nonjudicial foreclosure, but not New York.

Not surprisingly, the new approach has been criticized by lenders and their lawyers, who have accused Nowak of being "prejudicial" and overreaching his authority. They say that they don't have any legal responsibility or right to care for homes until they have formally taken possession of property through foreclosure.

They also say that the proposed city legislation would only add extra costs and work to the process. They even warn that it could put a chill on mortgage lending in the city.

"Lenders may decide not to make loans available to borrowers in Buffalo or may be forced to pass on the increased expense to the borrower in order to offset the added risk, duties and costs of this proposal, making borrowing more expensive in Buffalo," attorney Dawn A. Hanzlik-Hexemer of Steven J. Baum P.C. wrote in comments to Common Council.

"The end result would be a negative effect on the housing market and blight that is already occurring in the City of Buffalo," she wrote.

That blight includes the home at 260 Keystone, which incurred nearly $20,000 in fines for 13 violations.

The house had tenants as recently as last summer, when it was better maintained. But no one has lived there for months, so it's been subject to vandalism and decay.