Canton, OH Collects $1M from Bond Law on Default Properties
In January, CantonRep.com posted an article titled Canton Collects $1 Million with Bond Law on Default Properties.
Canton collects $1 million with bond law on default properties
The city has collected $1 million in the nearly three months since it began requiring banks to pay a bond on properties in default and could nearly double that in the coming week.
Safety Director Andrea Perry and Fair Housing Director Kyle Stone said lender Fannie Mae is expected to send the city a $750,000 check next week for properties in foreclosure.
“We’re very pleased with all the work Kyle has done,” Perry said of Stone, who’s been responsible for billing and collections. “This has been a very good program for the city.”
The city won’t keep all the money, but the $10,000-per-property bond is expected to save thousands of taxpayer dollars spent by the city in recent years to bring these vacant properties up to code.
The bond law requires banks or other financial institutions to secure a cash bond for each vacant property it files a default notice on. The city keeps $1,000, or 10 percent, as an administrative fee, and returns the rest if the property is maintained during its vacancy.
The law, first adopted in Springfield, Mass., aims to ease the burden on neighborhoods wrestling with blight that culminated from the foreclosure crisis and municipal workers responsible for enforcing building and property codes.
City Council approved the legislation in August 2012 but it was never enforced by the Canton Building Department. Some city officials, including Mayor William J. Healy II, supported the concept but said the original ordinance was flawed. Banks could skirt the bond requirement by withdrawing the foreclosure, writing it off as bad debt and then abandoning the property, which is more common among low-value properties.
Healy had also said that the city may not have the staff to enforce the ordinance. Among the problems, Perry said, was that there needed to be a clearer definition of property owner. Now, the city can go after loan servicing companies holding a mortgage on behalf of a bank. The ordinance was amended Sept. 30 to require banks to pay the bond within 30 days of filing a default notice, instead of waiting until after the start of foreclosure proceedings.
The amendment also shifted enforcement duties from the Building Department to Stone, who has handled the collection of nearly every foreclosure bond.
Councilman Kevin Fisher, D-5, a proponent of the legislation, said he’d hoped the city would have begun enforcing the ordinance sooner.
“The legislation wasn’t in perfect shape when it came down, but I would have liked to see some of the problems solved between the time it was passed and the nine months it took to amend it,” he said. “But it got done pretty quickly when we got everyone on board.”
Fisher credited Stone, saying he’s “jumped all over these things.” He also praised activist Norma Mills of Stand Up For Ohio for pushing for the ordinance and the amendments that made enforcement possible.
“The taxpayers are no longer going to be paying for the upkeep of these properties,” Fisher said.
Canton’s Foreclosure Bond Law: How it Works
- Ordinance takes effect within 30 days of a bank or other responsible party filing a default notice.
- They must register the property with the city. The registration must include a direct contact and phone number for the responsible party, whether the property is vacant or shows evidence of vacancy, how long the home is expected to be vacant and a plan detailing how the property will be maintained. A local property management company must be assigned if the responsible party is more than 30 miles outside the city.
- Banks must pay a $10,000 bond to the city, a portion of which will be retained for administrative costs. The bond will be refunded if no code violations occur during the vacancy.
- The registration is good for the calendar year in which it is filed, but must be renewed annually on Jan. 1. The city must be notified within 10 days of any changes on the registration form.
- There is a $125 non-refundable registration fee.
- There is a $300-per-day penalty for failing to register. After 10 days, the penalty is $500 per day.
- Properties must be kept free of weeds, dry brush, dead vegetation, trash, junk, debris, building materials and discarded personal items, like clothes and furniture. Properties must also be secured.
- If a violation occurs, the responsible party must pay a $150 fee to reimburse the city for issuing a violation notice.
- Problems must be corrected by the owner within a given period. If not, they are penalized $1,000 per day.
- If the city abates the nuisance, it will cover the expenses using the bond.
SOURCE: Codified Ordinances of the City of Canton
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Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.