Chicago Tribune “New laws Sprout as Homes Sit”
Robert Klein, CEO of Safeguard Properties, was quoted in a Chicago Tribune article about the difficulties in enforcing local ordinances with foreclosed properties.
New laws sprout as homes sit
But existing rules on vacancies often unenforced
By Mary Ellen Podmolik | Chicago Tribune reporter
August 24, 2008
Cece Edwards and her Chatham neighbors pride themselves on caring for their homes, but their block just doesn’t look like it once did.
Three residences are abandoned. Neighbors take turns picking up garbage and mowing the front yards, but they feel uneasy about the unsecured doors and fence-high weeds behind the buildings.
“You come out every day and you see this monstrosity thing going on, and you’re compelled to do something,” Edwards said. “The rest of the block is beautiful. It’s so sad. You’ve got really huge mortgage companies that own title to these properties and aren’t cleaning them up.”
Now communities large and small around the country, including Chicago, are passing laws designed to get tough with property owners. The ordinances look good on paper, but can they be enforced?
Consider this: Chicago already had an ordinance requiring owners of vacant property to register them with the city for $100 a year. The city’s building department estimates there are 10,000 vacant residential buildings in Chicago and only 1,500 are registered. City officials say that’s because the ordinance wasn’t heartily enforced.
In early November Chicago will have an even stricter law on its books. It calls for vacant property owners to register and pay $250 every six months. Higher fees will be assessed for code violations.
Enforcement also calls for what could be dramatic and visible changes in how vacant houses are secured.
For example, doors and windows can be boarded up with plywood only for the first six months of vacancy. After that owners must replace plywood with expensive steel panels or install windows and doors and a burglar alarm?a difficult endeavor where the power has been shut off. A large sign also must be posted identifying the owner and the person or company responsible for the property’s condition.
“Many of these buildings have been sitting vacant and unattended for five, six, 10 years,” said Richard Monocchio, acting commissioner of the city’s department of buildings. “It was time for the city to push these investors, these absentee landlords and in many cases, banks, to not just sit and wait for the market but to do something positive with these buildings so they wouldn’t have a [debilitating] effect on the neighbors.”
Monocchio hopes that the registration fees and fines will spur banks and other mortgage lenders to try to avoid foreclosures. “We hope one of the offshoots of this ordinance is a greater incentive on the part of the banking community to work with people that are in the house.”
Two months before it takes effect, the law already has naysayers.
“When you put a sign in front of your house, that’s the one they target to break in,” said Daryl Russell, a broker associate at Williamson Realty in South Holland. “That’s an open invitation that this is the one that is vacant.”
Russell said he tries to inspect his South Side foreclosure listings weekly for squatters. Break-ins by vandals and thieves also are common. At times, he said he’s had to wait for as long as 45 days to get reimbursed by property owners for thousands of dollars spent resecuring buildings.
“[The city] is missing the bigger problem,” Russell said. “How do we keep the people from going into properties? How do we keep people from losing the properties?”
Others question the wisdom of requiring steel doors.
“They’ll start stealing those doors. Right now they’re stealing all metal from those properties,” said Remi Gorys, president of A City Suburban Service Inc., which has been securing buildings for 15 years.
Flood of foreclosures
Chicago also will no longer grant work permits involving vacant buildings unless they are registered. And to gear up for the new law, residents will be reminded at aldermanic and block club meetings to call 311 to anonymously report vacant, unattended buildings.
South suburban Oak Forest passed a law in late July requiring owners to pay $200 to register vacant buildings. Neighbors had been cutting lawns at vacant homes, but with 78 foreclosed homes, Oak Forest has hired a firm to mow grass. The city is draining swimming pools that could pose safety hazards.
More such laws are expected around the Chicago area as the housing crisis deepens. Foreclosures in Chicago in July rose by 84 percent over their level in the same month two years ago. In the 60611 ZIP code on the city’s Near North side, for instance, the number of foreclosures filed has quadrupled, to 25 in July from 6 in the same month two years ago. During the same time frame, foreclosures in the 60659 ZIP code, which covers North Park and West Ridge, climbed 489 percent, to 53 from 9, according to data from RealtyTrac.
As reported Thursday, the Woodstock Institute, a Chicago-based non-profit that promotes community reinvestment, said in a report that the number of foreclosed properties going to auction in the five-county Chicago area climbed 98 percent between 2006 and 2007, to 13,727, and that it believes the trend is continuing this year. The finding is significant because it means many properties are ending up back with lenders rather than sold to buyers or investors who theoretically would be motivated to repair and maintain them.
Who’s the owner?
While on calls, Chicago’s 190 building inspectors will be expected to report addresses of vacant buildings they find so that the city can run title searches.
But determining ownership is not easy. Registration ordinances recently have recently been passed in communities like Temecula, Calif.; Methuen, Mass.; and Lee’s Summit, Mo., to name a few.
Lee’s Summit estimates the number of vacant homes in the community of 93,000 people has swelled to 300, but with the registry it hopes to determine a real number. “The biggest problem is you don’t know who to call,” said Mark Dunning, the city’s director of code administration. “You can make about 10 phone calls and not get anywhere.”
Real estate agents who work with banks to try to sell foreclosed properties worry that they will become targets of government regulations. For instance, Atlanta city inspectors, weary of the condition of foreclosed homes, have begun ticketing listing agents for code violations.
Registration enforcement has been slow around the country. In the first two months after registration rules went into effect this spring in Lake Elsinore, Calif., fewer than 60 of the estimated 1,000 foreclosed properties had been registered.
Mortgage bankers and firms hired to maintain vacant homes also are frustrated by the disparity in rules. For the past three months, Safeguard Properties, a large field services firm that works extensively in Chicago, has conducted weekly teleconferences with 70 to 80 mortgage servicing companies to update them on new laws.
“Every single day we get reports from different localities,” said Robert Klein, chief executive of Brooklyn Heights, Ohio-based Safeguard. “I’ve got ordinances from localities that I can’t even pronounce their names. There’s no way in the world that this industry can physically deal with 5,000 different ordinances, and each of them has their different caveats in them.”
