Miami Herald “U.S. mayors seek solutions to vacant-homes crisis”
The Miami Herald recently printed?two articles regarding the U.S. Conference of Mayors held in Miami, Florida, both of which quoted Robert Klein.
U.S. mayors seek solutions to vacant-homes crisis
The lawns were growing wild. The trash was piling up. And the mayor of Louisville, Ky., was tired of getting stuck with the tab for cleaning up someone else’s property.
So, Jerry Abramson picked up the phone and called the senior vice president of Wells Fargo, one of the country’s largest mortgage lenders and owner of multiple, derelict foreclosures in his city.
”You owe me $27,000 for the month of October,” Abramson told the lending executive, “How do I collect?”
Underscoring one of the chief frustrations cities face in dealing with the nation’s foreclosure crisis — collecting on liens for code violations, Abramson kicked off a strategy session at the U.S. Conference of Mayors in Miami Sunday to tackle the growing problem of vacant and abandoned property.
As the nation’s cities tighten budgets amid a slowing economy, preventing vacant homes from falling into decay and dragging down property values is becoming increasingly difficult. At least 2.2 million homes are expected to fall into foreclosure by the time the mortgage crisis ends, according to a report prepared for the mayors by the market and economic research firm Global Insight.
Many will remain empty for months, if not years, while the housing market recovers, potentially becoming objects of blight and targets for vandalism and theft.
”There is a huge bubble just beyond the horizon and I am really scared,” said Bill Finch, mayor of Bridgeport, Conn. “I have two [foreclosures] on my block and I live in a nice neighborhood and there is grass growing high.”
Nationwide, some 44.5 million homes sit adjacent to subprime foreclosures alone, according to estimates from Enterprise Community Partners, a national nonprofit that assists cities in developing affordable housing programs. Each home stands to lose $5,000 in value as a result, said Ali Solis, an Enterprise director who spoke at the hour-long session.
Most city code enforcement directors don’t have the phone numbers of banking officials in their Rolodex as Abramson does, however. Hunting down executives so violations can be corrected quickly and at minimal expense is easier said than done.
”When you are dealing with international conglomerates, it can be very difficult to get to the individual who is responsible for the problem,” said Robert Klein, chief executive of Safeguard Properties, which contracts with lenders for property maintenance services. He said his organization had partnered with the Mortgage Bankers Association to provide a resource site where city leaders can easily find lender contacts.
When lenders fail to respond, however, cities must act before properties decay, leaving taxpayers with a bill that may never be paid.
”How do we work to get cities and taxpayers back the dollars they are due?” Abramson asked. No one appeared to have a direct answer.
But Jeffrey Starkey, code enforcement commissioner for the city of Wilmington, De., said his department had begun immediately ticketing property owners for violations, much the way cars are ticketed for parking violations. Most cities must follow a protracted code enforcement process that can allow weeks to pass before property owners begin accruing fines for violations.
On a separate front, cities face the challenge of recycling homes back into neighborhoods, either when they foreclose on liens or the homes become undesirable to buyers because they are in disrepair. Several South Florida municipalities are exploring options.
Miami Gardens’ city manager Danny Crew has said his city, for instance, was preparing to foreclose on a batch of vacant homes for unpaid liens in the coming months. One plan on the table is renovating them to offer as affordable housing.
Pembroke Pines Mayor Frank Ortis told mayors at a separate task force meeting Friday his Broward County community was exploring the possibility of assuming delinquent mortgages on homes currently occupied by renters as a way to prevent further foreclosures.
Their efforts could get a boost from Congress this week when the Senate takes up a housing stimulus bill that, along with making it easier for at-risk borrowers to refinance into government-backed loans, would also provide nearly $4 billion in neighborhood stabilization money that hard hit states could use to purchase and rehabilitate bank-owned property.
Florida would stand to get $288 million of that, under a funding formula included in the bill, or enough to restore 8,669 homes, according to the nonprofit Enterprise.
President Bush opposes the grant measure and has threatened a veto of the bill if it is included.
”Congress has not heard from enough mayors that this funding is critically important,” said Solis, who urged task force members to ”get on the horn” to their local representatives.
”In the next 18 months . . every single community will be directly impacted by foreclosure and see a significant decrease in property values,” Solis said.
So, Jerry Abramson picked up the phone and called the senior vice president of Wells Fargo, one of the country’s largest mortgage lenders and owner of multiple, derelict foreclosures in his city.
”You owe me $27,000 for the month of October,” Abramson told the lending executive, “How do I collect?”
Underscoring one of the chief frustrations cities face in dealing with the nation’s foreclosure crisis — collecting on liens for code violations, Abramson kicked off a strategy session at the U.S. Conference of Mayors in Miami Sunday to tackle the growing problem of vacant and abandoned property.
As the nation’s cities tighten budgets amid a slowing economy, preventing vacant homes from falling into decay and dragging down property values is becoming increasingly difficult. At least 2.2 million homes are expected to fall into foreclosure by the time the mortgage crisis ends, according to a report prepared for the mayors by the market and economic research firm Global Insight.
Many will remain empty for months, if not years, while the housing market recovers, potentially becoming objects of blight and targets for vandalism and theft.
”There is a huge bubble just beyond the horizon and I am really scared,” said Bill Finch, mayor of Bridgeport, Conn. “I have two [foreclosures] on my block and I live in a nice neighborhood and there is grass growing high.”
Nationwide, some 44.5 million homes sit adjacent to subprime foreclosures alone, according to estimates from Enterprise Community Partners, a national nonprofit that assists cities in developing affordable housing programs. Each home stands to lose $5,000 in value as a result, said Ali Solis, an Enterprise director who spoke at the hour-long session.
Most city code enforcement directors don’t have the phone numbers of banking officials in their Rolodex as Abramson does, however. Hunting down executives so violations can be corrected quickly and at minimal expense is easier said than done.
”When you are dealing with international conglomerates, it can be very difficult to get to the individual who is responsible for the problem,” said Robert Klein, chief executive of Safeguard Properties, which contracts with lenders for property maintenance services. He said his organization had partnered with the Mortgage Bankers Association to provide a resource site where city leaders can easily find lender contacts.
When lenders fail to respond, however, cities must act before properties decay, leaving taxpayers with a bill that may never be paid.
”How do we work to get cities and taxpayers back the dollars they are due?” Abramson asked. No one appeared to have a direct answer.
But Jeffrey Starkey, code enforcement commissioner for the city of Wilmington, De., said his department had begun immediately ticketing property owners for violations, much the way cars are ticketed for parking violations. Most cities must follow a protracted code enforcement process that can allow weeks to pass before property owners begin accruing fines for violations.
On a separate front, cities face the challenge of recycling homes back into neighborhoods, either when they foreclose on liens or the homes become undesirable to buyers because they are in disrepair. Several South Florida municipalities are exploring options.
Miami Gardens’ city manager Danny Crew has said his city, for instance, was preparing to foreclose on a batch of vacant homes for unpaid liens in the coming months. One plan on the table is renovating them to offer as affordable housing.
Pembroke Pines Mayor Frank Ortis told mayors at a separate task force meeting Friday his Broward County community was exploring the possibility of assuming delinquent mortgages on homes currently occupied by renters as a way to prevent further foreclosures.
Their efforts could get a boost from Congress this week when the Senate takes up a housing stimulus bill that, along with making it easier for at-risk borrowers to refinance into government-backed loans, would also provide nearly $4 billion in neighborhood stabilization money that hard hit states could use to purchase and rehabilitate bank-owned property.
Florida would stand to get $288 million of that, under a funding formula included in the bill, or enough to restore 8,669 homes, according to the nonprofit Enterprise.
President Bush opposes the grant measure and has threatened a veto of the bill if it is included.
”Congress has not heard from enough mayors that this funding is critically important,” said Solis, who urged task force members to ”get on the horn” to their local representatives.
”In the next 18 months . . every single community will be directly impacted by foreclosure and see a significant decrease in property values,” Solis said.
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Foreclosure crisis a concern for mayors
”This entire crisis still continues,” Douglas Palmer, mayor of Trenton, N.J., said Friday in opening remarks to about 18 mayors and real estate industry leaders gathered in Miami for the U.S. Conference of Mayors.
The crisis’ potential impact was revealed in a new report revising the total property value lost from foreclosures to $1.46 trillion in 363 of the country’s largest cities by the end of the year, up from a November estimate of $1.2 trillion. The number of homes in foreclosure is also expected to rise 2.2 million, according to the study prepared for the conference by market and economic research group Global Insight.
PLUNGING VALUES
Home values in Miami-Dade and Broward counties could fall by an average of $47,571 per home, for a total decline in value of more than $60 million, the report said. David Iaia, a principal with Global Insight, told mayors the nation’s cities would remain on unstable ground until at least mid-2009 when the last major wave of adjustable-rate subprime loans should have reset.
Meanwhile, the mayors will be called on to help delinquent borrowers get foreclosure counseling, maintain vacant properties and use the bully pulpit to push for regulatory change in Congress.
Brian Montgomery, a housing commissioner for the U.S. Department of Housing and Urban Development, urged mayors to support the passage of legislation modernizing the Federal Housing Administration that would help expand affordable loans to new homeowners and help at-risk borrowers refinance. Other priorities were discussed, including finding additional funding sources for local counseling agencies and airing public service announcements about foreclosure alternatives.
VACANT HOMES
Central also to the 90-minute discussion were strategies for dealing with a growing number of vacant homes. Robert Klein, president and chief executive of Safeguard Properties, which manages real estate owned by lenders, said 22 percent of the 600,000 foreclosures his company inspected last month were unoccupied, placing them at risk of vandalism and other problems that could make them more difficult to sell.
They can also cause problem for cities concerned that blight will affect neighboring property values and drain municipal resources.
To address the problem in Florida, Lauderhill Mayor Richard Kaplan said he was drafting legislation to require lenders to register properties with the state. ”The biggest opponent to it is the lenders,” Kaplan said.
Earlier this month, Coral Springs became one of the first cities in South Florida to pass a law requiring registration of vacant foreclosures along with a fee, stiff fines, and an expedited code enforcement mechanism for dealing with derelict properties. Kaplan said a national registry was needed instead.
”Right now, each community is coming up with its own regulation and guidelines and there is no way a mortgage service company can deal with 500 different ordinances,” Klein said.
