Safeguard Properties

Absecon Considers Fixing Blighted Properties Making Owners Pay

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Legislation Update
April 9, 2018

Source: Shore News Today (full article)

Additional Resources:

eCode 360 (Collingswood, OH)

Municipal Code

Property Maintenance Code

Upkeep of Vacant and Abandoned Residential Properties Code

Abandoned Property Code

ABSECON — When it comes to getting lienholders to properly maintain their abandoned properties, Mayor John Armstrong believes the solution might be to just do it for them.

Addressing City Council on April 5, Armstrong said he’s in favor of creating an ordinance that would allow the city, through the Atlantic County Improvement Authority, to bring abandoned properties up to code and then place a lien on them. Property owners would be forced to either pay off their lien in a timely fashion or face losing their properties once that lien is sold.

It’s a proactive way to get mortgage owners of homes abandoned largely due to foreclosure, many of them banks, to start addressing the issue of blight caused by their derelict properties, he said.

“These banks, while they’re holding onto these properties, don’t want to spend money,” Armstrong said. “They wait and they wait and things start to deteriorate. You’d think it’d be in their best interest to maintain these properties, but all they do is slap on a Band-Aid.”

The abandoned home ordinance, as proposed, would go beyond simply cutting grass or boarding up broken windows to meet code standards, but would allow for significant work to help properties that have fallen into disrepair.

The effort should not cost the municipality either, Armstrong said. Through a joint municipal agreement with the improvement authority, the cost of construction would be paid through the authority, which not only has funding for such programs but already collects registration fees for homes that are left empty.

Though the ordinance has not been formally proposed, Armstrong said he would like to see one adopted within the next two months.

Armstrong said he’s seen the fruits of such a program in towns such as Collingswood, Camden County, which suffered with its own foreclosure problem and a declining downtown during the economic downturn. Armstrong said Collingswood Mayor Jim Maley told him a similar program helped resolve the issue of blight in his town and encouraged new homeownership.

Armstrong didn’t identify any properties specifically, but did say there are several that meet the criteria for such an ordinance. He hopes the ordinance sends a message to property owners to start making repairs.

“When you pick a property, there’s a whiplash response,” Armstrong said. “Mortgage holders and banks realize it’s for real.”

Securing Foreclosure Protections for Veterans

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Legislation Update
March 17, 2018

Source: DS News

Additional Resource:

U.S. Senate (S.2155 – Economic Growth, Regulatory Relief, and Consumer Protection Act info)

This past week the United States Senate passed legislation designed to help protect military servicemembers, veterans, and their families from foreclosure. Sponsored by Sen. Sheldon Whitehouse (D-Rhode Island), the legislation was included as part of the larger banking regulation bill passed by the Senate and makes permanent a one-year foreclosure grace period for service members leaving active duty.

“Those who serve our country ought to be given a fair chance to get their financial affairs in order when they return home,” Whitehouse said. “That’s why I’ve fought for years to extend and make permanent important foreclosure protection for servicemembers and veterans. I’m proud my bill to help recognize the noble work of our men and women in uniform is one step closer to the finish line.”

Following a report by the Commission on the National Guard and Reserves, Congress first extended the period of foreclosure protection from 90 days to nine months in 2008, working under the auspices of the Servicemembers Civil Relief Act. According to that report, “the threat of foreclosure is a stressor that need not be placed on members of the armed forces during the first months of their return to civilian life.”

The foreclosure grace period for servicemembers was extended to one year beginning in 2012, but it was initially instituted as a temporary measure. The grace period was set to expire in 2019, but Sen. Whitehouse had been working to pass legislation that would upgrade it to permanent status for several years.

Erik Wallin, Executive Director of Operation Stand Down Rhode Island, said, “Senator Whitehouse’s bill is particularly important in Rhode Island because we have one of the most deployed National Guard forces in the country. This bill provides servicemen and women with the relief they need as they transition from periods of active duty back into civilian life.”

Lawsuit Against City Officials Allege Vacant Property Registry Violates Fourth Amendment

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Industry Update
March 19, 2018

Source: MLive.com

SAGINAW, MI — An attorney has filed a federal class-action lawsuit against two Saginaw city officials, alleging that an ordinance violates the Fourth Amendment rights of property owners.

Phillip Ellison, a Hemlock-based attorney, file a lawsuit on March 14 in U.S. District Court naming the city’s Chief Inspector John Stemple and Clerk Janet Santos.

The lawsuit alleges that language at the bottom of an application to register unoccupied or vacant properties strips property owners of their protections against unreasonable searches and seizures by forcing them to sign them away in order to be compliant with the city law.

The particular part of the language reads:

“I  hereby agree that in the event my property becomes dangerous as defined by the City of Saginaw Dangerous Housing Code, I give permission for the City, its agents, employees, or representatives, to enter and board the premises or do whatever necessary to make the property secure and safe.”

Ellison said that that paragraph makes the application illegal, for one, because that language is not a part of the ordinance and secondly, because it gives government officials the right to enter someone’s property without a warrant.

“Law presumes that the government can’t just enter your property,” Ellison said.

According to Ellison, a government official would have to file a request for an administrative warrant by presenting an affidavit and evidence to a judge to obtain a warrant.

“The judge might not be convinced and may want to hear from the owner before making a decision,” Ellison said. “They can’t just walk in and start boarding it up.”

The lawsuit arose because James Benjamin, trustee of the Rebekah C. Benjamin Trust and client of Ellison, was ticketed by the city for two vacant or unoccupied properties he failed to register.

Ellison said his client does not have a problem registering the properties but does have a problem signing over his Fourth Amendment rights.

“If the city changes it, we can resolve this without going to court,” Ellison said.

The class-action suit will represent anyone who could be, or has been, signing these applications, Ellison said.

“We want to make sure that they don’t do this to anyone else,” Ellison said.

No money is being sought other than legal fees, Ellison said.

Ellison said Santos and Stemple were named in the complaint because it’s the city clerk’s responsibility to have the application available and the inspector’s job to enforce it.

“She’s requiring everyone to use it,” he said. “Stemple would authorize inspections and searches.”

Stemple and Santos are being represented by O’Neill, Wallace, & Doyle, of Saginaw Township.

Stemple declined to comment on pending litigation. Santos could not be reached for comment.

Foreclosure Proceedings Bill Approved in Florida

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Legislation Update
March 19, 2018

Source: Florida Senate (bill info)

Bankruptcy Matters in Foreclosure Proceedings; Authorizing lienholders to use certain documents as an admission in an action to foreclose a mortgage; providing that submission of certain documents in a foreclosure action creates a rebuttable presumption that the defendant has waived any defenses to the foreclosure; requiring a court to take judicial notice of orders entered in bankruptcy cases under certain circumstances, etc.

Property Maintenance Legislation Re-Introduced in New Jersey

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Legislation Update
February 1, 2017

New Jersey

S1423

Title: Requires creditors to maintain interior of vacant and abandoned residential property under foreclosure.

Status: The bill was introduced in the Senate and referred to the Senate Community Affairs Committee on February 1.

NOTE: This bill is a carryover of S1630. Please click here to view bill text.

Source: New jersey Legislature (S1423 full text)

Oyster Bay Bans Use of Plywood to Cover ?Zombie? Houses

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Legislation Update
February 18, 2018

Officials say the new quality of life law requires polycarbonate, or plastic glass, for covering windows and doors of foreclosed and abandoned homes.

The boarded-up eyesores of foreclosed “zombie homes” are set to become a thing of the past in Oyster Bay under a new law that went into effect last week.

The law bans the use of plywood to cover windows and doors in favor of polycarbonate — plastic glass — which is used for “clear boarding.”

Oyster Bay is following in the footsteps of Ohio, which last year banned plywood to board up foreclosed homes.

Homeowners, banks and lending institutions are responsible for replacing the wood, and the town will notify them of their responsibility, town spokeswoman Marta Kane said in an email. If they do not comply, town employees will begin doing it for them with materials that have recently been ordered and will charge them.

“The town strengthened the law to address quality of life concerns caused by dilapidated and vacant homes in our neighborhoods,” Oyster Bay Town Supervisor Joseph Saladino said in a statement. “Together with residents and local civic associations we are taking back our neighborhoods by cracking down on code violations and holding absentee landlords and lending institutions accountable.”

The town did not provide statistics for how many homes could be affected by the new policy. Last year, the town board approved cleanups, boardings or adding the cost to property tax bills for cleanups nearly 100 times, according to Newsday’s database of board agendas.

The new law also requires banks that foreclose on homes to deposit $25,000 to cover any costs to the town to clean up or board up the property.

The impact of vacant and abandoned homes can affect property values of neighboring homes. A publication of the U.S. Department of Housing and Urban Development in 2014 on vacant and abandoned homes said that vacant homes can depress the sales price of nearby homes by as much as 8.7 percent.

“Research links foreclosed, vacant, and abandoned properties with reduced property values, increased crime, increased risk to public health and welfare, and increased costs for municipal governments,” the publication said.

The problem became an issue during the election last year at a meet the candidates event sponsored by the Breezy Point Civic Association in Massapequa, which called attention to boarded up homes on Clocks Boulevard. Oyster Bay Town Clerk James Altadonna Jr., who addressed concerns at that event, said it’s been a goal of the administration to work with the civic organizations on the problems.

“For hardworking people that pay their mortgages, pay their bills, work very hard and their homes are their largest asset to have to come home and either have a house adjacent to them or across from them in disrepair is very disheartening,” Altadonna said in an interview last week.

Property cleanups/boardings in Oyster Bay
The Town of Oyster Bay authorizes property cleanups, boardings and assessments of the costs to property tax bills via resolution. This shows the number of resolutions, not the number of properties. Some properties may have more than one resolution.

  • 2017: 95
  • 2016: 64
  • 2015: 57

Source: Newsday database of Oyster Bay town board resolutions 

Source: Newsday

Additional Resources:

New York State Department of State (Local Law No. 2 full text)

Town of Oyster Bay, New York (1/23/18 Council Minutes)

DS News (More Communities Banning Plywood on Zombie Homes)

CBS New York (Long Island Town Bans Use Of Plywood To Cover Windows On Zombie Homes)

Safeguard Properties One Community web page (clearboarding legislation tracker)

New Year Brings New Industry Legislation

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Legislation Update
February 7, 2018

Georgia
HB 676

Status: The bill was Introduced on January 11 and current status states “Jan/19/2018 – House Second Readers”.

Legislative Summary

A BILL to be entitled an Act to amend Article 1 of Chapter 14 of Title 44 of the Official Code of Georgia Annotated, relating to mortgages, conveyances to secure debt, and liens, in general, so as to provide protections for military service members in the event of foreclosures or other proceedings to enforce secured obligations; to define a term; to provide for applicability; to provide for related matters; to repeal conflicting laws; and for other purposes.

Source: Georgia General Assembly (HB 676 full text)

Massachusetts
H.655

Status: The bill was referred to the Committee on Housing on January 23.

This bill proposes to provide tenants in properties to be sold at foreclosure or by short sale a right of first refusal to purchase the property.

Source: Massachusetts Legislature (H.655 full text).

Additional Resource:

City of Boston (FAQ page detailing H.655)

Mississippi

Two similar bills were introduced and referred To Banking and Financial Services:

HB 579

Full Title:

AN ACT TO ESTABLISH, AS AN ALTERNATIVE TO ANY OTHER FORECLOSURE PROCEDURE AUTHORIZED BY LAW, PROCEDURES FOR THE FORECLOSURE OF MORTGAGES BY ADVERTISEMENT UNDER WHICH A BORROWER MUST BE GIVEN AN OPPORTUNITY TO MEET WITH A LENDER REGARDING MODIFICATION OF A MORTGAGE LOAN ON A PRINCIPAL RESIDENCE BEFORE FORECLOSURE PROCEEDINGS MAY BE BEGUN; TO PROHIBIT A PARTY FROM BEGINNING FORECLOSURE PROCEEDINGS BY ADVERTISEMENT IF THE PRESCRIBED PROCEDURES HAVE NOT BEEN FOLLOWED OR THE APPLICABLE TIME LIMITS HAVE NOT EXPIRED, OR IF THE PARTIES HAVE AGREED TO MODIFY THE LOAN AND THE BORROWER IS NOT IN DEFAULT; TO REQUIRE A FORECLOSING PARTY, BEFORE PROCEEDING WITH A FORECLOSURE SALE BY ADVERTISEMENT, TO MAIL TO THE BORROWER A WRITTEN NOTICE CONTAINING SPECIFIED INFORMATION, INCLUDING THE NAME OF A DESIGNATED CONTACT PERSON WHO WILL HAVE THE AUTHORITY TO MAKE MODIFICATION AGREEMENTS AND A LIST OF APPROVED HOUSING COUNSELORS; TO ALLOW THE BORROWER TO BRING AN ACTION TO ENJOIN THE FORECLOSURE IF THE REQUIRED NOTICE WAS NOT SERVED; TO REQUIRE THE BORROWER TO CONTACT A HOUSING COUNSELOR IF HE OR SHE WISHES TO WORK OUT A MODIFICATION, AND REQUIRE THE COUNSELOR TO SCHEDULE A MEETING WITH THE DESIGNATED CONTACT PERSON; TO PROVIDE THAT FORECLOSURE PROCEEDINGS MAY NOT BE BEGUN UNTIL 90 DAYS AFTER THE NOTICE WAS SENT, IF THE BORROWER REQUESTS A MEETING; TO REQUIRE THE BORROWER, THE DESIGNATED PERSON, OR THE HOUSING COUNSELOR TO CALCULATE A MODIFIED PAYMENT IF THE MEETING DOES NOT RESULT IN AN AGREEMENT; TO REQUIRE THE MISSISSIPPI HOME CORPORATION TO PREPARE A LIST OF APPROVED HOUSING COUNSELORS; TO AMEND SECTIONS 89-1-55 AND 89-1-57, MISSISSIPPI CODE OF 1972, TO CONFORM TO THE PROVISIONS OF THIS ACT; AND FOR RELATED PURPOSES.

Source: Mississippi Legislature (HB 579 full text)

HB 563

Full Title:

AN ACT TO ESTABLISH PROCEDURES FOR THE FORECLOSURE OF MORTGAGES BY ADVERTISEMENT UNDER WHICH A BORROWER MUST BE GIVEN AN OPPORTUNITY TO MEET WITH A LENDER REGARDING MODIFICATION OF A MORTGAGE LOAN ON A PRINCIPAL RESIDENCE BEFORE FORECLOSURE PROCEEDINGS MAY BE BEGUN; TO PROHIBIT A PARTY FROM BEGINNING FORECLOSURE PROCEEDINGS BY ADVERTISEMENT IF THE PRESCRIBED PROCEDURES HAVE NOT BEEN FOLLOWED OR THE APPLICABLE TIME LIMITS HAVE NOT EXPIRED, OR IF THE PARTIES HAVE AGREED TO MODIFY THE LOAN AND THE BORROWER IS NOT IN DEFAULT; TO REQUIRE A FORECLOSING PARTY, BEFORE PROCEEDING WITH A FORECLOSURE SALE BY ADVERTISEMENT, TO MAIL TO THE BORROWER A WRITTEN NOTICE CONTAINING SPECIFIED INFORMATION, INCLUDING THE NAME OF A DESIGNATED CONTACT PERSON WHO WILL HAVE THE AUTHORITY TO MAKE MODIFICATION AGREEMENTS AND A LIST OF APPROVED HOUSING COUNSELORS; TO ALLOW THE BORROWER TO BRING AN ACTION TO ENJOIN THE FORECLOSURE IF THE REQUIRED NOTICE WAS NOT SERVED; TO REQUIRE THE BORROWER TO CONTACT A HOUSING COUNSELOR IF HE OR SHE WISHES TO WORK OUT A MODIFICATION, AND REQUIRE THE COUNSELOR TO SCHEDULE A MEETING WITH THE DESIGNATED CONTACT PERSON; TO PROVIDE THAT FORECLOSURE PROCEEDINGS MAY NOT BE BEGUN UNTIL 90 DAYS AFTER THE NOTICE WAS SENT, IF THE BORROWER REQUESTS A MEETING; TO REQUIRE THE BORROWER, THE DESIGNATED PERSON, OR THE HOUSING COUNSELOR TO CALCULATE A MODIFIED PAYMENT IF THE MEETING DOES NOT RESULT IN AN AGREEMENT; TO REQUIRE THE MISSISSIPPI HOME CORPORATION TO PREPARE A LIST OF APPROVED HOUSING COUNSELORS; TO AMEND SECTIONS 89-1-55 AND 89-1-57, MISSISSIPPI CODE OF 1972, TO CONFORM TO THE PROVISIONS OF THIS ACT; AND FOR RELATED PURPOSES.

Source: Mississippi Legislature (HB 563 full text)

New Jersey
AB 705

Full Title:

New Jersey Servicemembers Civil Relief Act

Status: The bill was introduced and referred to Assembly Military and Veterans’ Affairs Committee.

NOTE: AB 705  mirrors AB 994 from last session and earlier legislation

Source: New Jersey Legislature (AB 705 full text)

S 282

Status: The bill was introduced in the Senate and referred to the Senate Community and Urban Affairs Committee on January 9.

Synopsis

Requires mortgage lenders to maintain vacant, age-restricted dwelling units during foreclosure.

Source: New Jersey Legislature (S 282 full text)

New York
AB 8984

Status: The bill was introduced and referred to the Judiciary Committee on January 9.

The legislation would add the following requirement:

“If the plaintiff in a residential mortgage foreclosure action is other than a natural person, the plaintiff shall notify the municipal clerk of the municipality in which the real property is located within five calendar days of the filing of the notice of pendency for the foreclosure action.”

Source: New York State Assembly (AB 8984 full text)

West Virginia
HB 3025

Status: The bill was introduced and referred to House Political Subdivisions on January 10.

The purpose of this bill is to grant county commissions the plenary power and authority to establish by ordinance vacant building registration programs; setting forth procedures for administration and enforcement of those programs.

NOTE: HB 305 is a re-introduction of a bill from last session.

Source: West Virginia Legislature (HB 3025 full text)

Wisconsin
AB 818

Status: The bill was introduced on January 10 and executive action was taken on February 6.

This proposed bill makes various changes to condominium law and rights related to first mortgage security interests in condominium units.

Source: Wisconsin State Legislature (AB 818 full text)

Cleveland Heights May Explore Bond Ordinance

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Updated 6/7/18: Cleveland.com published an article titled Cleveland Heights council still reviewing idea of foreclosure bonds.

Link to article

Additional Resources:

Cleveland Heights City Council ( May 29 meeting policy/administrative analysis; June 4 meeting video)

Legislation Update
January 24, 2018

Blog Excerpt:

In other business at the Jan. 16 meeting, City Council heard from residents Gary Benjamin and Melody Hart on behalf of the Greater Cleveland Congregations organization, renewing their call for a local “foreclosure bond” ordinance.

Elsewhere, similar legislation requires that banks post the foreclosure bond to pay for maintenance of vacated homes.

Benjamin noted that of the estimated 200 foreclosed homes in Cleveland Heights, roughly half may be in the Noble neighborhood, driving down surrounding property values as they continue to deteriorate.

Mayor Carol Roe said she has supported the legislative proposal in the past, put forward by her predecessor on council, Jeff Coryell, in 2015.

She added that while $10,000 has been the historical standard for the foreclosure bond, the city may want to look at $12,000 to $15,000, given the age of Cleveland Heights’ housing stock.

Source: The Plain Dealer (full blog)

Clearboarding Bills Proposed in Maryland and New York

Posted on by Safeguard

Legislation Update
February 13, 2018

Maryland
HB 1079

Status: The bill was introduced and had its first reading in the Environment and Transportation Committee on February 7.

Synopsis: Requiring a building or housing code adopted by Frederick County or Prince George’s County to prohibit the use of plywood to board or secure the windows or doors of an abandoned or unsafe residential property and require the use of a certain polycarbonate material to board or secure the windows or doors of a certain property.

Source: Maryland General Assembly (HB 1079 full text)

New York
A6806A

Status: Originally introduced in March 2017, the bill was referred to the Judiciary Committee on January 3.

Source: New York State Senate

Additional Resource:

HVVN.com (Skoufis Hosts Demonstration to Clean Up Zombie Property Blight)

Zombie Homes: The Problem That Just Won?t Die

Posted on by Safeguard

Industry Update
January 8, 2018

The issue of so-called “zombie homes” is a problem for any major city. “Zombie homes” is a colorful name for an old problem, and one that continues to be widespread as the nation gains more distance from the housing crisis and the Great Recession. Zombie homes are created when the foreclosure process begins, the homeowner moves out, but then the foreclosure is canceled for one reason or another, leaving the home unoccupied—and often falling into disrepair. The issue—and misunderstandings surrounded it—is highlighted in a new story about how Portland, Oregon, is tackling the problem.

The Portland Tribune reported recently that Portland Mayor Ted Wheeler has reversed a policy put in place by his predecessor that was designed to crack down on zombie homes, threatening foreclosure on the properties in order either to force landlords to attend to the homes’ upkeep or get them into different hands. However, while former Mayor Charlie Hales pushed the Portland City Council to crack down on zombie properties, Wheeler considers the problem less of a priority.

Wheeler told the Tribune, “The obstacles for government to take away someone’s property are formidable. It’s a very expensive, multi-year process. I’m not sure that’s the best use of our resources.”

Of course, the problem with typical zombie properties is that there isn’t anyone in the house to be forced out. With the properties trapped in something like limbo, it’s hard to find a good solution for any of the parties involved, from the bank or mortgage company left holding the property, to the city governments tasked with fighting urban blight. As evidenced in Portland, even when one party comes up with a plan to address the issue, that plan can crumble in the wake of budget cuts or political change.

Would Hales’ plan have worked in the longer term? According to the Tribune, Portland only used the threat of foreclosure to force landlords to take care of their derelict properties in 10 cases during the previous 18 months. Of those 10 properties, the Tribune reports that “Landlords for eight of them paid off the liens before the auctions were set. The ninth was paid off just before the auction. The 10th was paid off after it failed to sell at the first auction but before the second auction was held.”

With Wheeler reversing course on Hales’ policy, the city is now effectively back where it was before that policy was put in place … and the city’s zombie homes still remain.

Several American cities have been trying to fast-track foreclosures in recent years as a means of combating blight and zombie properties. Fast-track foreclosure laws are already on the books in Ohio and Maryland, with states such as Illinois, Pennsylvania, and New York possibly following suit. Some municipalities are also trying to combat the individual symptoms of blight, such as in the case of Ohio’s banning of the use of plywood on vacant properties. In November 2016, Fannie Mae announced it would allow mortgage servicers to use clearboarding on vacant homes in pre-foreclosure, striking another blow against one of the tell-tale visual signs of zombie homes and urban blight.

In part three of a three-part series earlier this year, Robert Klein, Founder and Chairman of Safeguard Properties and SecureView, told DS News, “It’s all about keeping people in their homes as long as possible, but, once abandoned, a house becomes a liability. Fast-tracking enables the mortgage servicer to get possession of the property before it deteriorates. This directly leads to on-time conveyance and faster rehab and sale.”

Fast-tracking foreclosures—or even threatening to do so—can be one effective way to combat the zombie home plague, but evidenced by Portland’s problems, it isn’t always a politically popular approach. 
 
Source: DS News