Safeguard Properties

Senators Want Healey to Weigh in on Foreclosure Bill

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Updated 1/20/16: Masslive.com posted an article titled AG Maura Healey: Massachusetts foreclosure law cannot be repealed by ballot vote.

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Updated 12/31/15: Masslive.com posted an article titled Anti-foreclosure activists challenge Massachusetts’ new title clearing law.

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Updated 12/29/15: Worcester Business Journal Online posted an article titled Repeal bid creates hurdle for new foreclosure law.

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Updated 10/13/15: SouthCoast Today posted an article titled State foreclosure bill has fans, critics.

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Updated 9/21/15: Sentinel & Enterprise published an article titled Senate Backs Bill Designed to Support Homeowners at Risk.

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Link to additional information on MA S.1981

Current text of  MA S.1981 [pdf]

Legislation Update
August 13, 2015

STATE HOUSE — Senate leaders invited a handful of foreclosure experts to meet with on-the-fence lawmakers Thursday to walk through a title-clearing bill that had been scheduled for a vote before the August recess only to be delayed out of respect to questions raised by some senators.

At least eight senators and one House Democrat attended the Wednesday afternoon session led by Senate Majority Leader Harriette Chandler, according one senator who attended.

The meeting, held during a quiet afternoon at the State House in the midst of the summer break, was intended to help lawmakers better understand the issues involved in clearing titles to foreclosed properties.

“We were trying to really get our hands around this bill, and who it would affect,” said Sen. Kenneth Donnelly, an Arlington Democrat.

The bill that was laid aside two weeks ago (S 882) would create a three-year deadline for title disputes before another document, known as an affidavit, becomes binding proof of a proper sale. Supporters argue it would provide protection for homebuyers who might have purchased a foreclosed property only to later learn the title is in dispute and they are blocked from selling or refinancing their mortgage.

Anti-foreclosure activists have in the past criticized similar legislation as an affront to the rights of people who lost their homes in foreclosure. Former Gov. eval Patrick last year returned to the Legislature a nearly identical bill that reached his desk with an amendment increasing the title-clearing window to 10 years, but the move essentially killed the bill as it came after the Legislature had ended formal sessions for the year.
Presenters at the meeting on Wednesday included representatives of the title insurance industry, Greater Boston Legal Services, the real estate bar, an attorney for foreclosed property owners and Middlesex North Register of Deeds Richard Howe.

Donnelly said the meeting was “helpful,” but said questions remain unanswered, including whether the bill would nullify a national settlement reached in 2012 with the state’s five largest mortgage lenders that is bringing in $318 million to Massachusetts in relief for homeowners through cash payments, loan modifications and other concessions.

The settlement deal was struck, in part, by former Attorney General Martha Coakley, and Donnelly said senators are hoping new Attorney General Maura Healey will weigh in on the current bill.

“We need to find out from the attorney general if that’s true,” Donnelly said.

In addition to Donnelly, Sens. Daniel Wolf, Jamie Eldridge, William Brownsberger, Cynthia Creem and Linda Dorcena Forry and Rep. Denise Provost attended the informational meeting in the Senate’s fourth floor meeting room. Sen. Michael Moore, a co-sponsor of the bill, also attended.

Source: Nashoba Publishing

Additional Resource: MA S.882

Panel Pushes City Eminent Domain in Newark “Foreclosure Crisis”

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Industry Update
August 7, 2015

A panel convened here in St. Lucy’s Church July 30 urged Mayor Ras Baraka and the Municipal Council to use the city’s power of eminent domain to halt foreclosure of distressed houses and apartment buildings.
The panel of nine, convened by Communities United NJ, would like to see Newark take a path locally blazed by neighboring Irvington. The city, as explained by ACLU-NJ Executive Director Udi Ofer, would apply eminent domain to obtain distressed properties that are still occupied by its home owners and/or tenants.

Governments, said Ofer, prefer to use eminent domain to seize private property on the grounds of compelling public interest.

The Newark-based ACLU state branch leader gave an example of the state obtaining land to build a railroad right-of-way. Obtaining land for a highway right-of-way or an exit or entrance would be another example.

Eminent domain is often used as a last resort, when government offers to buy the land at fair market value or otherwise failing to agree to a price with the landowner in question.

Government may build up to eminent domain by designating properties that have become blighted or ‘”in need of redevelopment.”

South Orange Village, for example, has designated its entire self as an area in need of redevelopment as a means of rewriting its zoning master plan. Glen Ridge Borough applied a similar designation on a long-closed match factory so it could be redeveloped into apartment dwellings.

The key difference in application, however, would be the city taking over ownership of distressed properties – vacant or abandoned “zombie properties,” foreclosed properties or those with “upside down or underwater” mortgages – from banks and/or Private Label Securitization companies.

“The government would be renegotiating mortgages or loans with the banks or private lenders while allowing the homeowners and other residents to stay,” said Ofer. “This has never been tried in the courts – but, if you look at past court decisions, we believe this’ a legal way to save blighted communities.”

Hofstra Assistant Sociology Professor Christopher Niedt, in a 20-minute computer slide presentation before a St. Lucy’s hall audience of 35, outlined how bad a “foreclosure crisis” Newark and New Jersey are in.

Neidt, who also provided a 20-page “Our Homes, Our Newark: Foreclosures, Toxic Mortgages and Blight” report he co-authored with SUNY-Queens College urban Studies assistant professor Stephen McFarland, said that New Jersey is still one of the hardest hit states by Great Recession era foreclosures.

New Jersey, for example, currently tops the nation in foreclosure rates. One in every 210 Garden State housing units face foreclosure. Florida, by comparison, has one in 324 units and New York one in 476. Part of that dubious distinction is because many of the loan or mortgage payments that homeowners were able to renegotiate with banks or PLS lenders in 2008-12 are now coming due.

Newark, in Neidt and McFarland’s report, has 1,151 homes that are ‘underwater” or have mortgages from PLS companies. Banks and other lenders who attracted homeowners with sub-prime loans in the early 2000s were able to re-bundle or resell those mortgages and deeds to PLS. About 77 percent of those mortgages and loans have balloon payments or other “exotic” repayment plans.

Such affected housing are found among all five of Newark’s wards – but many can be found clustered in the North, West, Central and South wards.

The Neidt-McFarlane study also found links of abandoned or vacant buildings to declining neighborhood property values (and declining tax revenue), crime and declining neighborhood health.

It is not just Newark who has these distressed properties. The panel found similar patterns in the City of Camden – and in Monmouth and Ocean counties. Amanda Devecka-Rinear, of Point Pleasant, talked about the slow rate of home repair and pressing mortgages among those hit by Superstorm Sandy Oct. 28, 2012.

Baraka, who arrived with Councilman Eddie Osborne early in the 90-minute panel discussion, agreed with the assessment and proposed remedy.

“The same way we use eminent domain to develop properties, we should be able to use to keep people in their homes,” said Baraka. “This didn’t happen overnight.”

The Irvington Township Council voted a resolution supporting such eminent domain use last year. The City of East Orange is meanwhile surveying some 728 dwellings to find their owners. Orange had supposedly sold some $1.7 million worth of its distressed properties in bulk to West Orange developer Washington Bay last month.

Source: LOCALTALKNEWS.COM

Northern Schuylkill COG Works to Establish County?s First Land Bank

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Land Bank Update
July 22, 2015

In recent years, some municipalities in Schuylkill County have come up with strategic measures to gain ground in the war on blight.

For example, in 2012 the city of Pottsville assembled its own task force. Recently, Schuylkill County started putting its own together. And now a collection of municipalities and school districts is considering the possibility of forming one, too.

“It’s going to be called the Schuylkill County Land Bank,” Clyde C. “Champ” Holman, Ryan Township, chairman of the Northern Schuylkill Council of Governments, said Monday.

“In a nutshell, a land bank can acquire blighted and dilapidated properties easier than a municipality can, and the ultimate goal would be to get those properties back on the tax rolls. Land banks, of course, need funding in order to acquire these properties and either rehab or demolish them,” Mary Beth Dougherty, aide to state Sen. David Argall, R-29, said Monday.

Argall supports the project and said a combined effort may encourage the state to put funding into it.

“There’s strength in numbers,” Argall said.

So far, two municipalities — the boroughs of Shenandoah and Mahanoy City — and one school district, Minersville Area, have committed to join the first county-based land bank. Holman said he’s hoping a total of seven municipalities and five school districts come on board by October.

“It’s not for everybody. It’s for communities in need. It’s not a cure-all. It’s a tool to fight blight. It’s a way to strategically work with properties to re-purpose them to get them back on the tax rolls,” Holman said.

The matter will be discussed at 7 p.m. tonight at a meeting of the Northern Schuylkill Council of Governments at the Mahanoy Township Municipal Building at 1010 W. Centre St., Mahanoy City.

Origin

A land bank is a public or community-owned entity established to acquire, manage, maintain and re-purpose vacant, abandoned and foreclosed properties, according to the website for the U.S. Department of Housing and Urban Development.

“There are approximately 75 communities now operating formal land bank programs across the country,” according to www.hudexchange.info.

The largest is the one Argall, Dougherty and Holman used as an example, the Genesee County (Michigan) Land Bank Authority, which has acquired more than 10,000 properties.

“The concept started in Michigan, and I think it started there because of the decline of the automobile industry and the amount of blighted properties they ended up with,” Dougherty said.

In 1999, the Michigan State Legislature created a new, streamlined system for returning tax-reverted properties to productive use. And it allowed communities to reclaim and rebuild their neighborhoods. In 2002, the Genesee County Land Reutilization Council was formed. When the State of Michigan approved land bank legislation in 2004, the council became the Genesee County Land Bank Authority, according to www.thelandbank.org.

In 2012, the state House and Senate approved a version of the land bank law for Pennsylvania, Act 153, which enabled municipalities in Pennsylvania to create land banks. Today there are seven land banks in the state, according to Argall.

They are the Dauphin County Land Bank, Westmoreland County Land Bank, Philly Land Bank Alliance, Pittsburgh Land Bank, North East Pennsylvania Land Bank (which includes Pittston, West Pittston, Duryea and Jenkins), Harrisburg Land Bank and Venango County Land Bank.

Last year, Holman sent proposals to municipalities and school districts and a draft of an Intergovernmental Cooperation Agreement with obligations which include the following:

  • Properties owned by the land bank will not be taxed by the county, municipalities or school districts.
  • Each member municipality must provide a yearly contribution of $1,000 to the land bank. Such annual contributions will not be required from school districts which are members of the land bank.
  • Member municipalities must maintain the lawns and sidewalks of the properties acquired by the land bank. The school districts won’t have that responsibility.
  • If the land bank is able to return a property to taxable use, the county, municipalities and school districts agree to give the land bank half of the taxes collected on the property for five years.

“That’s how the land bank grows,” Argall said.

“That’s the funding that would allow it to perpetuate,” Holman said.

Progress

In the past year and a half, the Northern Schuylkill COG, which has 17-member municipalities, has been working with a consultant, Christopher Gulotta, Easton, to develop a plan for the first Schuylkill County Land Bank. And the COG sent letters to community and school district leaders, encouraging them to become part of the land bank by adopting ordinances.

On May 18, the Shenandoah borough council approved.

On June 17, the North Schuylkill school board declined.

On July 14, the Minersville borough council held its first reading of an ordinance regarding its involvement, Act 90. The second reading is scheduled for Aug. 11.

On June 29, the Minersville Area school board decided to get involved.

Holman said he hopes the boroughs of Ashland, Frackville, Girardville and Mahanoy City, Delano Township and the Mahanoy Area and Shenandoah Valley school districts sign on.

“We’re asking them to sign up by August 31. Our hope is to have an 11-member board of directors appointed by October,” Holman said.

Once established, he said the land bank can open a bank account and start to apply for funding while developing a list of properties to acquire and improve.

“One thing a land bank can do that a municipality cannot is negotiate with the Schuylkill County Tax Claim Bureau, if a property is eligible for judicial sale,” Dougherty said.

“The land bank’s money could be used for demolition, purchasing or even rehab,” Holman said.

“If a land bank can get a property that’s not completely gone, that’s salvageable, a land bank can go in and renovate it and turn around and sell it and get it back on the tax rolls,” Dougherty said.

One property that could benefit from a land bank, according to Dougherty, is a former home at 1129 W. Centre St., Ashland.

“I picked that property because its on the borough’s blight list plus it is eligible for judicial sale so its a great example of how a land bank could negotiate a sale with the tax claim bureau,” Dougherty said.

Holman said other municipalities and school districts in Schuylkill County are welcome to join, and encouraged officials with questions to call him at 570-778-1278.

Please click here to view the article online.

Arma Establishes Land Bank

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Land Bank Update
July 20, 2015

ARMA — A new economic development engine may help return abandoned property to productivity.

Following the lead of nearby Pittsburg, the Arma City Council authorized creation of a land bank to foster projects supporting home ownership, improving neighborhoods and more.

“It basically allows us to establish the land bank with us being the governing board of it and would allow us, that if property is available and we wish to get involved, we would be allowed to,” said Mayor Buddy Bualle.

Council members will serve as the trustees for the land bank, and asked about their flexibility and decision making ability as they administer the bank, and were told that they would be able to operate with fair flexibility.

Following a brief discussion, the council approved Ordinance 603 establishing a land bank for the City of Arma and also accepted a land bank policy, governing the land bank, as presented.

Council members also discussed the city’s goal of continuing to work on drainage problems.

Bull noted that work has been done in the Perry Street area, but some areas of town are still problematic.

“One is on Fourth between Perry and Williams,” Bualle said, adding that the rain backs up where train tracks once went through.

Council member Richard Kerley said he has studied the situation and thinks there could be a solution.

“I was watching it the other day,” he said. “To me, I think it needs wing walls built on it – build them as high as that street is there.”

He said the same type of situation impacts the intersection of Palmer and Fifth and recommended putting a box in there.

In other business, council members opted not to pursue extended warranties on a backhoe purchase, and authorized the purchase of a Kansas Highway Patrol vehicle, utilizing a lease-purchase from a local bank, for a price not to exceed $20,000.

Police Chief Jeremy Allen also reported that four nuisance letters were sent out Monday for tall weeds, tree limbs and abandoned vehicles, and asked that council members notify him of any other concerns around the community so he can send out letters in time to have properties cleaned up for Arma Homecoming.
 
Please click here to view the article online.

?Foreclosure Predicament Persists? in New York

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Industry Update
August 17, 2015

New York State Comptroller Thomas DiNapoli said that despite recent leveling off of foreclosures in the state, the problem is “far from resolved,” according to a report released by DiNapoli’s office on Monday titled “The Foreclosure Predicament Persists.”

Since DiNapoli’s office first reported on the impact of foreclosure activity on local governments in New York back in 2012, the trends in both new foreclosure filings and the number of pending foreclosure cases indicate that foreclosures remain a significant problem in New York seven years after the financial crisis and five years after the nationwide foreclosure peak.

CoreLogic reported that in June 2015, New York’s foreclosure inventory rate (the percentage of residential mortgages in some state of foreclosure) was 3.7 percent, three times the national rate for the month of 1.3 percent and second among states (New Jersey had 4.7 percent). And this was after a 16 percent decline in foreclosure inventory in New York from June 2014.

According to CoreLogic, New York’s serious delinquency rate for June was 6.7 percent, nearly double the national average of 3.5 percent for the month. New York’s total of 9,981 completed foreclosures for the 12-month period ending June 30, 2015, was sixth among judicial foreclosure states and 16th overall.

In the years immediately before and after the crisis, foreclosure filings rose by 78 percent in New York, from 27,000 up to 47,000. Anti-robo-signing rules for lenders enacted in October 2010 caused the number of filings to drop to 16,600 by 2011, but the number had risen back to slightly less than 47,000 by 2013. In 2014, they had fallen slightly to nearly 44,000. While the number of new foreclosure filings has been leveling off in the last two years, DiNapoli’s report says they are still elevated from their pre-recession levels. Also, the number of pending foreclosure cases has tapered off since May 2014, hovering around 92,000 in the last year– about 27 percent higher than in May 2013.

“In addition, the State’s courts are experiencing difficulties working through a large backlog of foreclosure cases pending in the State’s long and complicated judicial foreclosure process,” DiNaploli said in the report. “This large pool of properties in legal limbo weighs on local governments’ vitality in many ways, including reducing property values, eroding tax bases and propagating blight.”

DiNapoli reported that many major banks and services in New York agreed to follow a set of best practices regarding managing vacant and abandoned properties prior to beginning the foreclosure process. The practices include inspecting, securing, and maintaining the properties throughout the loan’s delinquency. DiNapoli said while the banks engage their best practices to maintain the properties, however, it is up to all of the stakeholders (courts, banks, local governments, and other groups) to work together to keep blight from spreading.

Source: DS News

Federal Protecting Tenants at Foreclosure Act

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Industry Update
August 21, 2015

In the aftermath of the 2008 financial crisis, one of the pieces of legislation that was intended to be considered “Main Street”-friendly, which is another way of referring to legislation that is supportive of locally owned small businesses and residences, was the Protecting Tenants at Foreclosure Act (“PTFA”).  In short, this statute provided protection for tenants who occupied residential real estate that was subject to mortgage foreclosure.

The PTFA permitted any occupant who was a non-relative of a foreclosure defendant who occupied real estate under an arms-length, bona fide lease for fair rental value, to remain in the property for the balance of the lease term. If the lease did not have a fixed remaining term, occupants were allowed to remain in the property for 90 days before a foreclosing mortgagee could commence ejectment proceedings.

Despite its good intentions, unfortunately the PTFA wound up creating more problems than it solved before it was eventually retired at the end of 2014, because it effectively turned foreclosing lenders into reluctant landlords.  Even worse, there was very little case law, be it federal or state, that arose to properly interpret the PTFA, as its originally written provisions were less than clear, and any case law that did exist often varied from jurisdiction to jurisdiction.  In Pennsylvania, virtually no case law existed that interpreted the PTFA.

This changed in August of 2015, with the entry of the trial court’s decision in Bosco Credit VI Trust Series 2012-1 v. Hofer, et al. (Blair County Court of Common Pleas, August 5, 2015), which was an ejectment case that called into question the applicability of the PTFA.  I represented the plaintiff in this case.

The Court eventually held that, considering the purported lease was not for fair rental value under HUD guidelines for the area, the protections of the PTFA did not apply, and therefore the ejectment of the tenant could proceed.

Although the Bosco Credit case has been appealed to the Superior Court of Pennsylvania, its existence represents what is very likely Pennsylvania’s first foray into the murkiness created by the PTFA.

Source: The National Law Review

County Board Approves Sound System for Courthouse Square; Land Bank Approved After Long Discussion

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Land Bank Update
August 18, 2015

In other Christian County Board action, the big topic of discussion was the possibility of the City of Pana and the County to apply for available grant funding for blighted properties.

Attorney Steven Mahrt of Ancel Glink of Bloomington, Illinois came and spoke  about the steps necessary in order to accomplish a grant application and also answered questions that Board members had.

Pana Mayor Steve Sipes was also in attendance and told the Board in a recent committee meeting that the City and County could form a not-for-profit agency by an intergovernmental agreement like the Cook County Land Bank.

After a lengthy discussion, the Board decided to  move on with plans with a joint agreement with the City of Pana and the Board in establishing a Land Bank.

There was also a motion  where a $1,000 rental fee will be used to create the Land Bank. Schmitz said the County will be the Land Bank and will hold the  property for the City of Pana and the County. Ten properties will be identified to be torn down and will be back on tax rolls, where the tax money will be received by Pana and the County.
 
 Source: Taylorville Daily News

Connellsville Authority Seeks Resolutions on Land Bank

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Land Bank Update
August 21, 2015

Communities that are interested in joining Connellsville in initiating a land bank designed to eliminate blight will be required to adopt resolutions indicating their interest in the program.

“We need to know which communities want to join Connellsville to support the land bank,” said Geno Gallo, a member of the Connellsville Redevelopment Authority and the administrative assistant for Fayette County Commissioner Al Ambrosini. “Each municipality that is interested in the land bank would need to appoint an elected individual to serve on the board.”

Tom Curry, Connellsville code enforcement officer, explained that Connellsville cannot begin the land bank on its own because a population of 10,000 people is required. In 2012, the city’s population was just over 7,500.

Representatives from Dunbar and South Connellsville were invited to a meeting Thursday at Connellsville City Hall to determine if their communities would be interested in participating in the program, Curry said.

“We only have a few properties that go to the tax sale in Dunbar,” said Tammy Nedrow, the borough’s secretary. “But we’re here to support our neighbors. I don’t think the land bank would benefit us as much as it would Connellsville. This is something that we can take back to council for discussion.”

Michael Edwards, executive director of the Connellsville Redevelopment Authority, said foundations will want to see a plan before they will agree to provide funding for the land bank

“We need grant money to help get it started,” Edwards said. “We will need a list of blighted properties.”

In addition to the list, Connellsville Councilman Brad Geyer, who works for state Sen. Pat Stefano, said a narrative needs to be written so the foundations would be aware of how dire the blight problem is in the Connellsville area.

“It’s not just bad in Connellsville. It’s a problem all over Fayette County,” Gallo said. “The three Fayette County commissioners are well aware of this problem. The mayor of Brownsville recently came to the commissioners seeking help for the blight in his community.”

Nedrow said Westmoreland County recently implemented a land bank for the entire county.

“Westmoreland County has had success with the program,” Nedrow said. “We need to get in touch with them to find out what steps they took to implement the program. That would give us an idea of what we need to do to get started.”

Westmoreland established its land bank program early last year. The program acquires properties with tax liens or foreclosures, then rehabilitates or demolishes the buildings before resale.

Fourteen municipalities of the 65 in Westmoreland County have joined the land bank with a one-time $5,000 fee.

Last year, Connellsville and representatives from other communities gathered to discuss formation of a land bank. However, after several meetings, talks were halted.

Source: triblive.com

Commissioners Approve Land Bank

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Land Bank Update
August 18, 2015

McPherson city commissioners voted to create a city land bank. This bank will be a point of contact for individuals and developers to acquire developable land that has been vacant, abandoned or foreclosed.

“A land bank’s an entity established to manage and dispose of distressed property for the purpose of stabilizing neighborhoods and encouraging reuse or development of property,” McPherson City Administrator Nick Gregory said.

“It’s just a tool that makes it easier for us to buy and sell property,” Gregory said. “Particularly if we run into properties that are in less than desirable condition, but it also provides an opportunity for us if we feel there’s a need to buy a property for residential construction, that’s also a tool that’s out there for us, as well.”

The land bank will be governed by a board of trustees made up of three members, the mayor and commissioners.

The commission will now take steps to develop doctrine for the land bank.

Public input

During the public input portion of the city commission meeting as well as during study session, McPherson resident Jerry Potter brought up a concern about new sidewalks in the city. City ordinance states that new sidewalks must be 5 feet in width, while many existing sidewalks were originally installed at 4 feet. Even when residents replace new sidewalks on existing property, those sidewalks must adhere to the 5-foot rule. Potter stated that this makes for inconsistency all over town.

“My main concern is appearance. It doesn’t look good,” Potter said. “I don’t think it’s going to be safe.”

Potter, who also owns JP Construction, brought photos of a sidewalks along Euclid Street that had been replaced by residents under the city’s sidewalk replacement program, pointing out the inconsistency and poor look of the area.

“I am here to represent the tax payers of McPherson,” Potter said.

The city’s Finance Assistant Rich Miller said the 5-foot policy has been in place for some time, but the enforcement hasn’t been very strict up until recently.

Streets and Utilities Commissioner Larry Wiens agreed that the sidewalks in the photos were poorly done.

“I’m going to give city inspectors some direction on how it can be done better,” Wiens said.

Source: McPherson Sentinel

Commission Wants a Land Bank

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Land Bank Update
August 18, 2015

The Atchison City Commission expressed interest on Monday in creating a new program called a land bank, which would allow the city of Atchison to take possession of blighted properties for housing redevelopment.

Commissioners gave city staff their nod of approval on Monday following City Manager Trey Cocking’s presentation on the subject. Now, an ordinance creating a land bank is expected for the commission’s approval on Tuesday, Sept. 8.

Source: Atchison Globe