Safeguard Properties

City Council Rejects Land Bank

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Land Bank Update
August 19, 2015

Hazleton lacks the financial resources and manpower for launching and maintaining a local land bank program, council members said when formally rejecting the proposal Tuesday.

With Luzerne County officials considering their own land bank program and a regional land bank program currently serving Pittston and at least four other municipalities, Hazleton City Council members say they want to take a wait-and-see approach before launching a local program.

Council ultimately voted 3-1 when nixing a land bank program and ordinance introduced by Councilman Jeff Cusat. Councilman Keith Bast did not attend.

“The City of Hazleton is in financial difficulty right now,” Councilman Dave Sosar said prior to the vote. “How are we going to come up with extra money to develop a land bank? I’m very hesitant. I’m not saying it’s not a good idea. I’m saying it’s a good idea on a larger level.”

President Jack Mundie agreed with Sosar, saying that while he doesn’t oppose the concept of a land bank, he questioned the timing of Cusat’s proposal and whether the city would be in a better position to address blighted and tax-delinquent properties by passing laws designed to bring properties owned by financial institutions up to code.

“I think that it’s a good tool that could probably help the city, but you need money, resources (and) people,” Mundie said of land banks. “I’m not saying it’s a bad idea. I’m not totally against it. Maybe it’s something that should be addressed later.”

Council Vice President Jean Mope, meanwhile, said the city should wait and see whether Luzerne County creates its own land bank program and possibly follow through with an idea pitched by audience members about having Hazleton participate in the county’s initiative.

“The county gets better funding,” Mope said. “If we pursue it and run short on funding I don’t want it to fall back on taxpayers.”

Mope also said she had concerns about how the city would come up with start-up funds — and said the city administrator made a similar point when she questioned him about finances.

Cusat told council that he doesn’t want to squander an opportunity to team with Pennsylvania Housing Alliance, which has committed to helping the city establish a local land bank even though it faces it own set of financial challenges in 2016 and beyond.

The councilman also publicly questioned Luzerne County’s willingness to help the city should it create a county-run program.

“If we pass an ordinance, they’re willing to help us … with the legal (aspects),” Cusat said. “The county is never going to give us anything. We’re always going to be the kid with the short stick.”

Disappointed with the outcome, Cusat lashed out at council for passing on the program.

“I spent two years working on the land bank,” Cusat said. “They were well aware it was in the process (of being organized). It seems to me that everybody wants to be a follower and see what everybody else is doing. No one wants to come up with ideas and be innovative. We don’t need to wait around to see what other cities are doing. If you never try it, you’ll never know if it works.”

Cusat pitched the land bank as an efficient and cost effective means of returning blighted and tax-delinquent properties back on the tax rolls.

According to the ordinance, the land bank would return “vacant, blighted, abandoned, and tax-delinquent properties to productive use.” The city and its redevelopment authority would identify surplus vacant properties for the land bank to acquire.

It would acquire a property through donation, purchase or any other legal means, including tax sale, judicial sale or by transfer from Luzerne County Tax Claim Bureau.

The land bank will hold properties in its name and could opt to sell them to a developer and set a deadline for renovations and returning it to the tax rolls or can take smaller parcels and offer to split them among two neighboring property owners — and have the land maintained and put back on the tax rolls, Cusat said.

At least six audience members who spoke about Cusat’s land bank proposal either offered alternatives or asked council to delay a vote until county council decides whether to move forward with a similar program.

Attendee Dee Deakos asked what the land bank would do differently than Hazleton Redevelopment Authority, which has been working to renovate and sell properties in the East End neighborhood.

Audience member Mark Rabo told council that while federal Community Development funds can be used to fund a land bank program, the land bank must specify the intended use for each property before it can expend the funds. Rabo called on council to allow the city’s blighted property and redevelopment authority boards to perform their duties before considering a local land bank program.

Audience member Grace Cuozzo said the program will create unnecessary property maintenance costs and urged the city to continue on its path of using Neighborhood Stabilization Program and HOME grants for renovating properties.

County council candidate Ray Gustave urged council to delay a vote until the county decides on its program. Steve Franco of the Northeast Realtors Group argued that land banks should not be competing for properties with the private sector.

Mundie thanked Franco and Gustave for their comments and publicly lobbied for voters to support county council candidates Gustave, Rabo and Robert Schnee in the upcoming election.

Source: standardspeaker.com

City and County Considering Land Bank Idea

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Land Bank Update
August 6, 2015

Garden City and Finney County are considering creating a land bank to repurpose abandoned and vacant properties.

On Tuesday, Kaleb Kentner, Garden City’s planning and community development director, proposed establishing a land bank. Holcomb City Council members also were invited to the presentation, but none were present.

According to state statute, a land bank is an entity created by local government to “efficiently hold, manage and transform vacant, abandoned and tax-foreclosed property back into productive use.” It’s used as a way to put those properties back on the property tax roll.

The idea came about after a county tax sale in October in which 59 parcels of land that owed delinquent taxes were sold, generating $1,184,767.

The money was used to pay delinquent taxes on the parcels. Any excess money went back to the property owner, minus fees and interest.

At the tax sale, the county paid $332,354 by default for 28 parcels after no one bid on them.

On Thursday, Finney County Administrator Randy Partington said the county currently owns 29 properties that include homes, buildings, empty lots and unusable property, such as driveways and easements.

Kentner said a land bank would help alleviate the county’s role in maintaining that many properties until another tax sale was organized.

“I think that’s the issue right now that the county’s facing is having to maintain and take care of all those properties,” Kentner said.

Kentner said there is a cost to managing the properties and communities oftentimes end up getting caught with those costs. In a tax sale, some costs are paid while others may not be paid, depending on things like foreclosure.

“We don’t recoup any of those things, and we still have a problem of vacant lots or dilapidated properties that aren’t being productive. They’re not on the tax rolls. They’re not doing the community any good in those neighborhoods,” Kentner said.

A land bank could help expedite the process of getting those properties back on the tax roll.

With a land bank, a trust would be created and an appointed board would oversee properties acquired. While in the trust, a property would be exempt from property taxes, assessments, charges, penalties and interest. The only exception would be special assessments levied to finance public improvements.

The trust would take over the role of maintaining and taking care of those properties, Kentner said.

Residential, commercial and industrial properties could be eligible for the land bank.

There are legal requirements involved in establishing a land bank. According to an information packet Kentner provided to commissioners, the land bank must be governed by a non-compensated board of trustees; the board of trustees must keep accurate accounts of all receipts and disbursements; all records and accounts must be available for public inspection; and the land bank must make an annual report to the governing body, including an inventory of all property held by the land bank.

Kentner said the city and county commissioners could establish policies for the board of trustees to follow. Having a board that deals solely with those properties would help expedite the process of getting them back on the tax roll because that would be their sole responsibility, he said.

“The whole point of the land bank is to get the properties out of this stagnant state of nothing and bring them back into productivity, and adding to the values of … the neighborhoods,” Kentner said.

Kentner said several communities in the state, including Hutchinson, Greensburg and Junction City, have established land banks. Each one operates differently, based on that particular community’s needs.

Based on his research of other land banks, Kentner said, getting one fully operational and productive takes time, possibly several years.

“Once a land bank is established, it may take three or four years of collecting properties, purchasing foreclosed properties, before they actually start marketing any of those,” he said. “It’s a hodgepodge of properties all over, and they’re trying to understand how to get those properties into productivity.”

Kentner said he wanted to bring the topic to both commissions to gauge interest.

“I think it all just really depends on what you guys think is important and whether it’s a priority at this time or not,” he said.

No action was taken Tuesday, but planning and development staff will continue to research the idea and will present options and alternatives later for further consideration.

Please click here to view the article in its entirety.

All Ohio Counties Are Now Eligible to Form Land Banks

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Land Bank Update
August 5, 2015

MANSFIELD, Ohio – Ohio’s smaller counties now have access to a powerful tool previously available only to their more populous counterparts – the land bank.

The state legislature has voted to eliminate the 60,000 population threshold for counties wishing to establish land banks, thereby extending land-banking authority to every county in Ohio. The move doubles – from 44 to 88 – the number of counties now eligible to form a land bank.

Jim Rokakis, director of Western Reserve Land Conservancy’s Thriving Communities Institute and the father of Ohio’s widely acclaimed 2009 county land bank statute, applauded the legislature’s lifting of the population floor. He said Thriving Communities Institute, which has helped establish most of the 24 existing county land banks in Ohio, expects to hear from smaller counties that have seen how land banks have helped revitalize communities and remove blight.

“Land banks can work for counties all over Ohio, not just the larger counties,” Rokakis said. “Tax delinquent, abandoned properties are present in every county of Ohio – and land banks are a powerful way to deal with them.”

Rokakis, then the Cuyahoga County treasurer, was the driving force behind the 2009 state legislation that allowed Cuyahoga County to create Ohio’s first county land bank. The following year, the remaining 45 counties with populations over 60,000 received authority to create land banks.

The law will take effect Sept. 29.

Land banks give counties the ability to take tax delinquent properties that have been abandoned and repurpose them. Perhaps the most important feature of the law is the fact that the title to these properties is “cleansed” as a result of the foreclosure, and that clean title allows the property to be transferred easily to either an adjoining owner or another entity that will make the land productive again. This tool has been used thousands of times throughout Ohio since the land bank law was first passed.

Robin Thomas, land bank program director for Thriving Communities Institute, said, “Smaller counties have experienced many of the same issues as larger ones. They have seen the success of county land banks in removing blighted properties through demolition, greening and transferring those properties into the hands of responsible property owners. These smaller counties want to create a land bank.

Western Reserve Land Conservancy preserves natural areas and farmland in northern and eastern Ohio and helps revitalize cities statewide through its Thriving Communities Institute. To date, the Land Conservancy has permanently preserved more than 560 properties and more than 42,000 acres.

Thriving Communities Institute has led efforts to create county land banks throughout Ohio and to secure the funding cities need to demolish vacant, abandoned and unsafe homes. In addition, Thriving Communities has launched Reforest Our City, an initiative aimed at restoring Cleveland’s depleted tree canopy. Working with the city of Cleveland and Holden Arboretum, Thriving Communities Institute conducts Sherwick Tree Steward Training for residents and has started a grant program that enables community development corporations and other nonprofits to plant trees.

More than 1,100 trees have been planted under the Reforest Our City program.

The Land Conservancy is headquartered in Moreland Hills and has field offices in Cleveland, Akron, Medina, Oberlin, Chardon and Orrville.

Please click here to view the release in its entirety.

Remediating Abandoned, Inner City Buildings Reduces Crime and Violence in Surrounding Areas, Penn Study Finds

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Industry Update
July 8, 2015

PHILADELPHIA – Fixing up abandoned buildings in the inner city doesn’t just eliminate eyesores, it can also significantly reduce crime and violence, including gun assaults, researchers from the University of Pennsylvania and Penn’s Perelman School of Medicine report in the first study to demonstrate the direct impact of building remediation efforts on crime. The findings were published this week in the journal PLOS ONE. 

The research team, which included Michelle Kondo, PhD, a former research fellow at the Perelman School of Medicine now a scientist with the USDA Northern Research Station, John MacDonald, PhD, a professor of criminology at Penn, and Charles Branas, PhD, a professor of epidemiology at the Perelman School of Medicine, found a significant decrease in serious and nuisance crimes in areas around remediated buildings after Philadelphia began enforcing an ordinance requiring owners of abandoned buildings to improve their facades and install working doors and windows in 2011. The most significant reduction (down by 39 percent) occurred for gun assaults around remediated buildings in the year following improvements.

“Replacing broken windows and doors is an effective deterrent of crime—and a low-cost alternative to demolishing abandoned buildings,” MacDonald said. “During a time when big cities like Philadelphia are looking to tackle issues of crime and violence, this study points to a potentially effective tactic for municipalities to continue or implement in helping make their neighborhoods safer and ultimately improving health outcomes.”

Prior research suggests that vacant and abandoned places have a significant and negative impact on community health and safety.  The “broken windows” theory proposes that abandonment sends a signal to would-be offenders that committing crimes is acceptable and will likely go unchallenged or unseen.  A sister study of abandoned land, not buildings, conducted by Branas, MacDonald and others in 2011 found an association between greening remediation of vacant lots and reduced risks of neighborhood violence, stress, and sedentary behavior.  Other studies have found associations between boarded-up buildings and drug-related deaths and sexually transmitted diseases.

“City-wide, we found significant reductions in total crimes, assaults, gun assaults, robberies and nuisance crimes associated with ordinance compliance,” said Kondo, lead author of the study. “This could be the ‘broken windows theory’ in action, with new doors and windows and a newly cleaned building facade signaling to potential offenders that a property is occupied and crime is not tolerated.”

To address the 40,000 or so vacant properties tallied up in Philadelphia in 2010 and the issues that came with them, the city started enforcing a “Doors and Windows Ordinance” in 2011.

Researchers found that of the 2,356 buildings cited by the Philadelphia Department of Licenses and Inspections, 29 percent complied with the ordinance between January 2011 and April 2013.  The team then compared the number of reported crimes and acts of violence at these “treatment” sites, where abandoned building owners had complied with the ordinance, to sites that had not complied, within one-half of a mile.

The crime and violence classifications included:  all crimes, assaults, gun assaults, robberies, property crimes (burglaries and thefts), narcotics sales and possession, and nuisance crimes (vandalism, illegal dumping, public drunkenness, and disorderly conduct).

Compliance with the ordinance was associated with significant decreases in many of the crime and violence categories.  City-wide, in areas around abandoned buildings that were remediated, over the 12 month average follow-up period in the study, there was an estimated 19 percent reduction in assaults, 39 percent reduction in gun assaults, and a 16 percent reduction in nuisance crimes. The size and significance of some of these effects, however, varied by section of the city. 

Control sites were not statistically different from treatment sites in terms of the median age of the surrounding residents, their household income, education level, or poverty level.

“This study provides useful evidence that cities can directly impact some of their most pressing public health challenges, like violence, by changing the places within which their residents live, work, and play, as opposed to relocating residents as has been done in the past,” Branas said. “These sorts of place-based programs are gaining credibility as practical and low cost, yet potentially high-return, health and safety solutions when compared to other options.”

Co-authors include Danya Keene, PhD of the Yale University School of Public Health and Bernadette Hohl, PhD of the Rutgers University School of Public Health and School of Criminal Justice.

The study was supported in part with funding from the Robert Wood Johnson Health & Societies Program at Penn and a U.S. Centers for Disease Control grant to the Penn Injury Science Center.

Source: Perelman School of Medicine/University of Pennsylvania Health System

Related Media Coverage:
Philadelphia Inquirer
Newsweek

Nevada HOA Foreclosures Cannot Extinguish Deeds of Trust Held by Fannie Mae, Holds U.S. District Court

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On June 25, Jon H. Patterson and R. Aaron Chastain of Bradley Arant Boult Cummings LLP authored an article discussing a recent decision by the U.S. District Court for the District of Nevada.

Nevada HOA Foreclosures Cannot Extinguish Deeds of Trust Held by Fannie Mae, Holds U.S. District Court

Yesterday, the U.S. District Court for the District of Nevada issued an important ruling concerning the litigation over whether homeowners’ association foreclosures under Nevada’s super-priority lien statute (NRS 116.3116) can extinguish first deeds of trust when the underlying indebtedness is owned by a Government-Sponsored Enterprise (GSE) like Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Company (Freddie Mac).

In Skylights LLC v. Byron, Case No. 2:15-cv-00043-GMN-VCF, Chief Judge Gloria Navarro held that federal law prohibited a state-law HOA foreclosure from extinguishing a first deed of trust assigned to Fannie Mae. However, the Court’s decision included language indicating that its holding could be limited to the rare scenario where Fannie Mae (or Freddie Mac) is record beneficiary of the deed of trust at the time of the HOA’s foreclosure—a potential limitation that could greatly limit the extent of the Court’s ruling.

As discussed several times before on this blog, lenders and mortgage servicers doing business in Nevada have found themselves enmeshed in litigation over whether they still have a valid security interest securing loans for many of properties in the State following the Nevada Supreme Court’s opinion in September 2014 holding that a properly conducted HOA foreclosure under NRS 116.3116 would indeed extinguish all other security interests on the property—including purchase-money first deeds of trust recorded before the HOA even recorded its notice of default.

Following the Nevada Supreme Court’s ruling, one of the arguments raised by lenders is that for loans where a GSE owns the underlying indebtedness (and therefore is the party entitled to enforce the deed of trust), the federal Housing and Economic Recovery Act (HERA) prohibits a state law such as NRS 116.3116 from eliminating a property interest held by the federal government through its conservatorship of Fannie Mae and Freddie Mac. The Federal Housing Finance Agency (FHFA) has intervened in several suits involving GSE loans to advance the argument.

Chief Judge Navarro’s ruling from yesterday was the first significant decision on the issue. Chief Judge Navarro sided with the lenders and FHFA, holding that the “plain meaning of [12 U.S.C. § 4617(j)] is that when FHFA is acting as a conservator, none of the property sought to be conserved by FHFA may be subject to a foreclosure without its consent.” Op. at 9.

As noted above, there is a possibility that Chief Judge Navarro’s ruling—as promising as it sounds—is limited in scope. Skylights LLC involved a unique set of facts: for reasons not explained in the opinion, CitiMortgage had assigned its deed of trust to Fannie Mae before the HOA foreclosed on the property, meaning the HOA had constructive notice that Fannie Mae had a property interest in the property at the time it conducted its foreclosure sale. Chief Judge Navarro’s analysis is not expressly limited to the facts of the case; however, it is conceivable that it will be limited just so. The opinion makes mention of the fact that Fannie Mae was the record beneficiary of the deed of trust at the time of the HOA foreclosure. See, e.g., Op. at 19 (“Based upon the recorded documents, it is undisputed that the Deed of Trust was assigned to Fannie Mae several months before the HOA conducted its foreclosure sale.”).

Indeed, the final “money line” of the order states: “Accordingly, because FHFA held Deed of Trust as conservator for Fannie Mae prior to the foreclosure, section 4617(j)(3) prevents the HOA’s foreclosure on the Property from extinguishing the Deed of Trust.” Op. at 21

The lending community will probably not have to wait long to find out the limits of Chief Judge Navarro’s ruling. Two other similar cases that were argued along with Skylights just one week ago (Williston Investment Group v. JPMorgan Chase Bank, N.A., et. al., No. 2:14-CV-02038-GMN-PAL; Elmer v. JPMorgan Chase Bank, N.A., et. al., No. 2:14-cv-01999-GMN-NJK) are still awaiting Chief Judge Navarro’s rulings. Each of those cases presents the more common fact scenario: at the time of the HOA foreclosure sales, the GSEs were not the recorded beneficiaries of the deeds of trust (though evidence in the record in both cases indicates the GSEs purchased the loans and acquired an interest in the deeds of trust prior to the HOA sales). Supplemental briefing in those two cases is due in early July. The lending community will simply have to wait and see whether that factual distinction makes all the difference.

Please click here to view the article online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

Milwaukee Council Approves Ordinance Identifying Homes Near Foreclosure

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On June 23, the Milwaukee-Wisconsin Journal Sentinel published an article titled Aldermen pass measure targeting zombie houses.

Aldermen pass measure targeting zombie houses

An ordinance that — Scooby Doo-style — unmasks the ghosts in control of zombie houses was approved by the Milwaukee Common Council on Tuesday.

The measure also requires lenders to give the city a heads-up when residential properties near foreclosure.
 
“It is an attempt to better know proactively homes that may become vacant,” said Ald. Jim Bohl, a co-sponsor of the measure.

The information can be used to intercede in a potential abandonment by connecting residents who are at risk of losing their homes with reliable mortgage counselors, Bohl said.

And it helps reduce blight in neighborhoods troubled by zombie homes — abandoned and often decrepit houses with no entity with clear responsibility — by broadening disclosure requirements for lenders and mortgage service providers.

“If we get notice of potential foreclosures, the city is in a better position to make sure vacant and abandoned properties are boarded up and secure and someone will be responsible for grass cutting, snow shoveling and general maintenance,” said Ald. Bob Bauman, another of the bill’s sponsors.

Besides advance notice of foreclosure, the measure requires the lender to register the property’s location, the lender and borrower of record, the current owner of the loan, the mortgage service company as well as contact information for whoever is responsible for inspecting, securing and maintaining the property.

The ordinance requires periodic inspections and updates of any change inthe registered information.

Mayor Tom Barrett said he welcomed the measure, which he said fits hand-in-glove with the city’s Strong Neighborhood Plan.

And it addresses the city’s zombie house problem by making clear “who’s got legal responsibility for the property,” he said.

Please click here to view the article online.

Please click here to view the full text of Ordinance 141900 [pdf].

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

Menendez Bill Would Help Homeowners at Risk of Foreclosure Stay in Their Homes

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On June 16, the office of U.S. Senator Robert Menendez (D-NJ) issued a press release discussing the introduction of the Preserving American Homeownership Act of 2015.

Menendez Bill Would Help Homeowners at Risk of Foreclosure Stay in Their Homes

With record NJ foreclosure and underwater rates, bill will help families keep their homes and mitigate costs vacant homes impose on neighborhoods

WASHINGTON, DC – As New Jersey continues to lead the nation in foreclosure rates – and specifically in  “zombie” foreclosures – U.S. Senator Robert Menendez (D-NJ), Ranking Member of the Senate Subcommittee on Housing, Transportation and Community Development today introduced the Preserving American Homeownership Act, to help homeowners who are underwater on their mortgages remain in their homes. According to RealtyTrac, one out of every 594 New Jersey homes is in foreclosure.   The Atlantic City region leads the nation among metropolitan areas of its size with one in every 297 properties in foreclosure. 

“Far too many New Jerseyans are underwater on their mortgages and are all too familiar with the burden this brings,” Senator Menendez said. “My bill aims to give homeowners the break they need by working with banks to find acceptable solutions for everyone. Not only can we help families stay in their homes, we can mitigate the impact zombie foreclosures have on our communities and our economy.”

Phyllis Salowe Kaye, Executive Director of New Jersey Citizen Action, said: “The sad fact is that millions of homeowners still have underwater FHA and FHFA mortgages and many are facing foreclosure.  Principal reduction is the most effective way to keep people in their homes, to prevent foreclosures and to stabilize neighborhoods that have been decimated by vacant and abandoned properties.  Senator Menendez’s bill offers real solutions. It should be supported and passed quickly by Congress. “

Further troubling for communities struggling with large numbers of homes in foreclosure, a recent report found New Jersey has the highest “zombie” foreclosure rate in the country, with one out of every 201 housing units vacated before a completed foreclosure.  These owner-vacated foreclosure properties likely end up as short sales, foreclosure auction sales, or bank-owned sales.

The Preserving American Homeownership Act is specifically aimed at homeowners who owe more than their house is worth (“underwater”), which is currently estimated to be 5.1 million homeowners, or more than 10 percent of all homes with a mortgage, according to CoreLogic.  About two million of these homeowners are underwater by a significant amount – they owe at least 25 percent more than the value of their home.

Even with home prices rebounding since the financial crisis, millions of homeowners are still underwater on their mortgages because of the broad national decline in home values that has occurred since 2007, which can be seen here. Because of this, homeowners may be at risk of foreclosure, unable to sell their home and move, or forced to walk away at great cost, further hurting the still-fragile market.  Meanwhile, banks are reluctant to reduce the amount owed to them (“principal”) because they are concerned about losing income.

The legislation seeks to help both parties – homeowners and lenders – by creating a program in which banks reduce the mortgage principal for eligible homeowners. In exchange, banks would be entitled to a portion of any increase in the value of the home down the road. The program is a win-win for everyone: underwater homeowners receive relief on their mortgages, while banks agree to take a short-term reduction for a long-term gain as the housing market recovers. In a similar program tested by a private mortgage servicer, almost 80% of homeowners who were offered the opportunity to participate chose to do so and had a re-default rate of only 2.6%.

Additional Details

Click here to download the full text of the bill.

  • The principal balance of the loan would be reduced to 100% or less of the re-assessed value of the home, provided the homeowner is able to make reduced payments; the principal balance would be reduced in 1/3 increments per year.
  • In exchange, the bank would receive a fixed share (of up to 50%) of the increase in the home’s value when the home is sold or later refinanced, up to a maximum of twice the amount of principal reduced. The share depends on factors to be determined by the Federal Housing Finance Agency (FHFA) and Federal Housing Administration (FHA), including how much the bank initially reduced the principal.
  • Home values would be determined by independent third-party appraisers.
  • Two pilot programs would be established by the FHFA and FHA.
  • Homeowners are eligible no matter how far underwater they are, but they must make timely payments on the modified mortgage going forward or they will not receive any principal reduction.
  • Both primary and secondary residences are eligible.

Please click here to view the press release online.

Please click here to view the full text of the Preserving American Homeownership Act of 2015 [pdf].

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

MBA, PwC White Paper Tracks Powerful Impact of Nonbank Servicing

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On June 24, HousingWire released an article discussing the release of The Changing Dynamics of the Mortgage Servicing Landscape.

MBA, PwC white paper tracks powerful impact of nonbank servicing

Nonbank mortgage servicers have changed the industry

The Mortgage Bankers Association and PricewaterhouseCoopers today announced the release of The Changing Dynamics of the Mortgage Servicing Landscape, a white paper addressing the current state, and history, of mortgage servicing.
 
The white paper describes the changes that have occurred in the mortgage servicing market to get us to where we are today.  It also discusses how increasing servicing costs can impact the price that consumers pay at origination and highlights the trends that have led to non-bank servicers gaining an increasing market share in recent years.
 
“Non-bank servicers are a critical component of the real estate finance industry and their recent growth reflects a normal cyclical change in the marketplace,” said David Stevens, President and CEO of MBA. “This whitepaper will help educate stakeholders and policymakers about mortgage servicing, in hopes of that they will better understand the market dynamics as they make policy decisions and recommendations going forward.”
 
“Mortgage servicing remains a dynamic and critical component of the financial services industry. For industry participants, it’s critical that the flexibility exists to adapt business models and strategies when the markets dictate change,” commented Roberto Hernandez, principal, PwC US.
 
Additionally, this whitepaper provides a summary of the regulatory framework that applies to both bank and nonbank servicers as well as a perspective on two areas that have recently generated regulatory interest: mortgage servicing transfers and servicer net worth, capital and liquidity requirements.
 
Key findings of the paper include:

  • Non-bank mortgage servicers in the top rankings are not a new phenomenon.  In the late 1980s and early 1990s, non-depository mortgage bankers were major players in the servicing market.
  • While banks and non-banks have differences in how they finance operations and whether they hold deposits, all mortgage entities are subject to the same consumer-related regulatory requirements with differing prudential requirements.
  • Banks still hold the majority of the mortgage servicing assets in the country, while the five largest non-bank servicers have seen their market share grow significantly.
  • Regulators and guarantors with different oversight responsibilities have enhanced rules around consumer facing conduct, operational requirements and capital and liquidity in recent years.  The impacts of these changes are not limited to servicers.
    Consumers are also impacted by servicing due to the interplay between servicing costs and upfront loan pricing.

The full report is available for download here.

Please click here to view the article online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

Indianapolis Amends Code for Vacant Building Standards

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On July 14, the Indianpolis Star published an article titled Council passes ‘zombie homes’ ordinance.

Council passes ‘zombie homes’ ordinance

At issue is a troublesome category of abandoned housing that multiplied in the wake of the mortgage crisis

The City-County Council took aggressive though largely symbolic actions Monday against Mayor Greg Ballard’s electric car share program and abandoned foreclosed homes.

The council approved an ordinance by a 17-10 vote to hold banks accountable for so-called “zombie mortgages” that foreclosed home owners have walked away from. Though the ordinance can’t be enforced under Indiana law, its backers insist it isn’t a meaningless exercise.

At issue is a troublesome category of abandoned housing that multiplied in the wake of the mortgage crisis. The houses are caught in limbo because owners have abandoned them, though they still own the titles for years with no one taking care of them.

Following in the footsteps of other cities across the country, the council wants to force banks to step in when an owner walks away.

Council members engaged in a spirited but courteous debate. Though all agreed that the vacant buildings were hurting their neighborhoods, some questioned the practicality of passing a toothless ordinance.

“This is not enforceable; this does nothing,” said Republican Aaron Freeman. “I have no idea why we would pass this. If you want to change the law, run for the state legislature.”

“For us to pass this is a big waste of time,” said Republican Jack Sandlin. “It’s air, it’s paper, it’s ink.”

Defenders of the action said it sends a powerful message to the legislature and their own constituents that they want to address urban blight. And Republican Jeff Miller said it has already grabbed the notice of the banking industry.

“If this was just ink and air, why did we all of a sudden start getting emails from banking lobbyists when we drew up this ordinance?” Miller asked. “Why are they now hitting us up not to do this?”

Miller and others said passing the ordinance puts the city in a position to act quickly if the law is changed.

Republican Robert Lutz said council members owe it to their constituents to fight for the law.

“Our city is made up of neighborhoods, and we need to empower them,” Lutz said. “We are sending a message to the state legislature, and we are encouraging our constituents to contact them and say, ‘Why can’t you change this?’ ”

Democrat Zach Adamson said the ordinance would send the message that “we hold all owners accountable whether they are individuals or corporations.”

As written, the ordinance would treat any lender that issues a foreclosure notice on a vacant home like a property owner. Theoretically, that would leave the bank on the hook for cutting the grass, cleaning up trash and other responsibilities.

Zombie homes aren’t the epidemic they were at the height of the housing crisis in 2008. But they haven’t vanished, either.

According to RealtyTrac, a housing data analyst, zombie foreclosures still represent 25 percent of all active foreclosures. Indiana had 5,217 zombie homes at the end of January — the seventh most in the country. City officials haven’t studied how many there are in Indianapolis.

There’s little doubt the ordinance wouldn’t stand up in court without a change in state law — Miller acknowledges as much. State Sen. Jim Merritt, R-Indianapolis, the architect of the abandoned housing bill, promised to study the issue in more depth this summer but said the issue should be addressed statewide, not at the local level.

Meanwhile, a proposal co-sponsored by Republican Christine Scales and Zach Adamson would require BlueIndy to remove within 90 days five demonstration models that have been parked on Washington Street Downtown.

Adamson and other council members have said that in rolling out the program, Ballard, a Republican, brushed aside their concerns and those of their constituents. The critics also oppose using $6 million in city funds to help pay for the $50 million program.

The resolution states that the $6 million could be used “ to repair some of our critically failing infrastructure around the county” and adds that the cars are parked illegally between Meridian and Pennsylvania streets.

The resolution states that it is illegal for cars to be “stopping, standing or parking at all times on that portion of Washington Street” and that “no person shall park a vehicle on any street in the city for the primary purpose of displaying advertising of any nature.”

The city and BlueIndy, a subsidiary of a French conglomerate, are building 200 charging stations and rental kiosks around the city. BlueIndy has dedicated $41 million, while Indianapolis Power & Light Co. is paying for construction of the chargers.

Parking meters funds are being used to pay the city’s share. The proposal was referred to the Public Works Committee, chaired by Adamson.

Please click here to view the article online.

Please click here to view the ordinance (Proposal No. 153, 2015) [pdf].

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.

Higgins Proposes Legislation to Expedite Sale of Foreclosed Homes by Banks

Posted on by Safeguard

A recent article published by The Buffalo News discussed the Vacant Homes Act of 2015 (H.R. 3203), which was introduced by Representative Brian Higgins (D-NY-26) on July 23.

Higgins proposes legislation to expedite sale of foreclosed homes

In an attack on a buildup of properties left vacant by foreclosure, Rep. Brian Higgins is proposing a bill that would expedite the sale of foreclosed homes by banks.

“Vacant, foreclosed homes tarnish communities and leave neighbors living on these streets with no recourse,” said Higgins, D-Buffalo, who announced the legislation – the Vacant Homes Act – outside an abandoned house in Cheektowaga on Tuesday.

“The existing system lacks urgency to move properties back into the hands of caring homeowners. While properties remain in limbo, communities suffer.”

The measure would require banks to respond to short sales – selling a property for less than the amount owed on that property.

Under the bill, banks and other mortgage lenders would have 90 days to respond to an offer of a short sale. If the offer is rejected, the bank would be required to explain why, provide an economic analysis demonstrating that fair-market value exceeds the offer or demonstrate a reasonable expectation that the owner would receive a better offer within 12 months.

In Erie County alone, about 2,000 foreclosures are filed each year, but it takes an average of three years to move a home to auction.

Oftentimes, homeowners will abandon their properties during the process – usually unaware they are required to maintain the property. Meanwhile, the houses – known as “zombie homes” – fall into disrepair, lose value and blight neighborhoods.

Higgins spoke in front of one such home on Trudy Lane.

Weeds crept up on the porch, and a tattered tarp flapped atop a ruined roof. On the door hung a notice of violations from the Town of Cheektowaga dated May 20, though the house had long been abandoned. Neighbors said they have dealt with the house’s declining condition for even longer.

Denise and Michael Klesic have lived two houses from the vacant property for more than a decade. They described the home as a “thorn.”

“Everybody was really mad,” Denise Klesic said. “This is terrible.”

Michael Klesic said that rats made a home in the property’s overgrown grass and that when the town mowed the lawn, the rats found a new home in his shed, ruined it and forced him to tear it down.

“This is all too common in Western New York,” Higgins said.

Kate Lockhart, a Western New York Law Center paralegal, said the longer a foreclosure process takes, the more likely homeowners are to abandon the properties.

“A short sale finalizes all that,” she said. “They’re able to sell the property, know they’re done with it and know the banks won’t come after them. It’s finalizing something so they can move on. Most of these people have gone through traumatic experiences already.”

A 2015 report from the New York State Department of Financial Services found that New Yorkers faced the fourth-largest foreclosure timeline in the nation, at three years. The nationwide average is less than two years.

Banks, homeowners and communities could all equally benefit from faster sales, Lockhart said.

“The banks can possibly make more money on a short sale earlier in the process,” she said. “And rather than having a vacant and abandoned property in their neighborhood for years on end, neighborhoods can have a new family come in.”

Cheektowaga Supervisor Mary F. Holtz said Higgins’ bill would result in another tool for local government.

“Every neighborhood has some vacant houses or this type of situation, especially after the recession we had,” she said. “It’s not just Cheektowaga. You go to Amherst or Clarence – there are vacant houses in every single neighborhood. It’s the same problem over and over again, and most of it is banks and foreclosures. It’s a continuing problem. Everything we get from the state and federal governments will help us because we can only do so much on a local level.”

Even when the Trudy Lane house is sold, Holtz said, the home would probably need to be demolished in a couple of years because of the continuing neglect.

“It’s a shame,” she said. “It’s a beautiful structure.”

Please click here to view the article online.

Please click here to view the proposed text of the Vacant Homes Act of 2015 (H.R. 3203) online.

Please click here to view a related press release from Representative Brian Higgins online.

About Safeguard 
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow.  Website: www.safeguardproperties.com.