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Harvard’s Joint Center for Housing Studies Releases Annual Housing Report

Posted on September 13, 2018September 13, 2018 by Safeguard

On June 24, the National Council of State Housing Agencies (NCSHA) published an article discussing the release of The State of the Nation’s Housing 2015.

Harvard’s Joint Center for Housing Studies Releases Annual Housing Report

Harvard’s Joint Center for Housing Studies (JCHS) releases today its annual report entitled The State of the Nation’s Housing 2015. This year’s report highlights low homeownership rates and continuing renter housing cost burdens as areas of concern. The Joint Center’s report concludes that the housing market, buoyed by the persistent strength and demand of the rental market and continued employment growth, can regain some of the recovery momentum that was lost during 2014. The report also comments on the value of the Housing Credit and tax-exempt bonds, highlights the gap between housing needs and federal appropriations, and demonstrates the importance of preservation of at-risk affordable housing.

One of the major drags on housing recovery in 2014, according to the report, was the ongoing decline of homeownership rates. Homeownership rates in the United States continued their downward trend, with rates falling for the eighth straight year, marking a 20-year low with 64.5 percent in 2014. The report warns that this trend is not likely to dissipate in the near future; the homeownership rate in the first-quarter of 2015 was 63.7 percent. The report states that steady erosion of household incomes since the beginning of the recession and the tightening of credit by mortgage lenders are primary factors in homeownership rates being at their lowest levels in over two decades.

Please click here to view the article in its entirety.

Please click here to view The State of the Nation’s Housing 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.

Blight Money for Detroit, Other Cities, Safe in Transportation Bill

Posted on September 13, 2018September 13, 2018 by Safeguard

On July 24, the Detroit Free Press published an article discussing a Senate decision to not rescind unspent money from the Hardest Hit Fund in order to help pay for a transportation measure (DRIVE Act).

Blight money for Detroit, other cities, safe in transportation bill

WASHINGTON — An updated version of a 6-year transportation bill unveiled on Capitol Hill on Friday morning no longer includes a provision to rescind money from a fund that is paying for blight eradication in Detroit and across Michigan.

As first reported in the Free Press on Thursday night, U.S. Sen. Debbie Stabenow, D-Mich., struck a deal with Senate Majority Leader Mitch McConnell to ensure that unspent amounts in the Hardest Hit Fund were not raided to help pay for the transportation measure.

An earlier version of the legislation, released early this week, proposed taking $1.7 billion in unspent funds from the fund, a move which, if enacted, could have devastated blight removal efforts in Detroit and other Michigan cities.

The new version of the bill to be considered on the Senate floor no longer even mentions the Hardest Hit Fund. The Free Press obtained a copy of the substitute version earlier Friday.

Speaking on the Senate floor, McConnell noted the removal, noting the objections raised by several senators, including U.S. Sen. Rob Portman, R-Ohio, who had been working on an amendment to save the funds if necessary. Michigan and Ohio are among the top recipients of Hardest Hit Fund money.

Thursday night, Stabenow told the Free Press that she had reached the agreement with McConnell, R-Ky., that would save the remaining amounts in the $7.6-billion Hardest Hit Fund, including that still unspent in Michigan’s $498-million allocation. The state has allocated $175 million to battle blight in 16 Michigan communities, including $100 million in Detroit.

The fund was created in 2010 to help stabilize neighborhoods and help homeowners stay in their homes in the wake of the housing crisis and the great recession. While some of the funds are being used for blight removal in cities across the nation, no city in the U.S. has had as much blight removal money committed to it from the federal government as Detroit, as the Free Press has previously reported.

“It’s a major victory,” Stabenow said Thursday night. “They were talking about trying to tweak it. I indicated to them that it was not going to work. It was totally unacceptable.”

Stabenow said Thursday that even though attempts had been made by the Environment and Public Works Committee to mitigate some of the losses to the fund, she still considered it unacceptable and was willing to place a hold on the bill, which could have stalled it for days, with the U.S. House set to leave for a month at the end of next week.

With that threat on the table, Stabenow said McConnell, who has made moving the legislation a priority, agreed to remove the provision from the bill, meaning funding would have to be found elsewhere but that the legislation could move forward.

If there were any attempt to reinsert the provision, Stabenow said, she would again move to stall its progress. But she added that the effort to remove the funds means she and other senators from states receiving the funds are going to have to be on guard for any effort to take it away again in future legislation. Under the law, the states receiving the funds have until the end of 2017 to spend all they have been committed. Eighteen states and Washington, D.C., received allocations under the Hardest Hit Fund.

“We’re going to have to watch very closely,” Stabenow said. “I’ve been indicating for some time I thought this was an area Republicans would want to go after.”

A Republican-generated report outlining the intention to go after unspent money in the Hardest Hit Fund complained that the fund has been ineffective and poorly managed and that now, with housing values recovered in much of the nation, the remaining money — there was about $2.4 billion of the original $7.6-billion allocation left as of the end of June — could be used to pay for infrastructure.

Stabenow, along with U.S. Sen. Gary Peters, D-Mich., and members of Congress from other states, notably Ohio, howled loudly at the proposal, arguing that cities like Detroit or the state could get stuck with potentially millions in bills incurred but not yet reimbursed by the federal government. As far as the state of Michigan was concerned, for instance, practically all of the total $498 million has already been committed to work scheduled or programs already underway, even though many of the bills haven’t come in yet or been sent for reimbursement.

Peters said late Thursday in a statement: “I strongly oppose the provision in the highway bill cutting the Hardest Hit Funds and was proud to work with Sen. Stabenow and my colleagues in the Senate to ensure Michigan cities that are bouncing back from the economic crisis are not at a disadvantage as they work to revitalize their neighborhoods.”

The loss of the program would have been “devastating to Detroit’s neighborhoods,” Detroit Mayor Mike Duggan said in a statement late Thursday that praised the victory by Stabenow, who he said “has been relentless over the last 48 hours leading the fight to restore this program.”

While it’s not known exactly how much Detroit, other cities and the state could have lost overall, it could have topped $100 million, depending on how the Senate defined “unspent” or “unobligated” funds. Meanwhile, it could have stymied an ambitious blight removal program in Detroit which has torn down thousands of properties, as well as those in older industrial-based municipalities across the state.

In Michigan, more than $340 million of its $498-million allocation had been spent as of June 30, leaving more than $150 million. But much of that has already been committed to projects around the state.

Stabenow, in a speech on the Senate floor Thursday, argued against the provision, calling any move to rescind money already promised to cities for revitalization efforts “outrageous,” especially since in many cases work has already been done but not yet been reimbursed by the federal government.

“Money they have been counting on, money they have been allocated, will be taken back,” said Stabenow, who added that more than a dozen cities in Michigan have been hiring contractors to tear down buildings or do redevelopment work “counting on the fact that they will be paid because we, the federal government, have given them, in writing, our word.”

In her speech, Stabenow talked at length about home values rising in Detroit as blight is removed and neighborhoods are redeveloped. She also noted reporting done by the Free Press about the dangers posed by a vast number of vacant structures around city schools and how the Hardest Hit Fund program is helping support efforts to tear down some of those buildings.

“For communities around this country, this is a big deal. Certainly this is a big deal for Michigan, and I can’t in any way support any effort going forward unless this is fixed,” said Stabenow at the time.

Please click here to view the article online.

Please click here to view the full text of H.R. 22 (Developing a Reliable and Innovative Vision for the Economy Act (DRIVE Act) online.

Bill Could be Useful Tool in Property Maintenance

Posted on September 13, 2018September 13, 2018 by Safeguard

On July 22, standardspeaker.com posted an article discussing PA HB 795 (former HB 853 of 2013-14), a piece of proposed legislation currently in the Pennsylvania Assembly that would address property registration and maintenance.

Bill could be useful tool in property maintenance

A municipal solicitor in numerous communities, Donald Karpowich sees a bill recently introduced in the state House as a useful tool to deal with property maintenance issues on foreclosed properties.

House Bill 795, which was introduced by Rep. Tina M. Davis, D-141, and is co-sponsored by Rep. Tarah Toohil, R-116, would force lenders to register and maintain properties they foreclose on.

“This bill … requires the entity foreclosing on the property to be required to maintain the property and keep it habitable,” Toohil said. “There are a great many constituents who lose their homes and are forced to leave and then the property sits vacant for over five years. The property becomes uninhabitable and dilapidated.

“When they become blighted and are abandoned, it then effects the entire community,” she said.

Karpowich dealt with issues regarding properties in Black Creek Township and Freeland Borough, where he serves as solicitor, he said.

Neither the bank nor ousted homeowners would take responsibility for the properties, leaving them further deteriorate and forcing the communities to take action on their own, he said.

“This usually occurs once the creditor learns of the condition of the property and its code violations,” Karpowich said. “The municipality is then in a position to try to seek compliance under the code for the violation by the creditor or owner.”

House Bill 795 protects against this situation by requiring registration of the property within seven days of the foreclosure, maintenance of the property, reimbursement to municipality for maintenance it performs and the appointment of person within 20 miles who is responsible for the property, he said.

In Freeland, the bank foreclosed on the property, which had code or quality of life issues, and neither the owner or bank would do anything, because neither claimed ownership, said borough Council President Dave Mahon.

“It left the municipality in limbo,” he said.

The bank eventually turned over the property, which became a sore spot in the neighborhood, to the borough, Mahon said. But it took years, and the borough Business and Development Authority now owns the property, he said.

In Black Creek, the foreclosed property sat vacant for more than three years and continued to deteriorate, causing neighbors to complain, supervisors Dennis Feerrar and Bonnie Adams said. The bank backed off on the foreclosure, the house went up for sheriff’s sale, but no one purchased it because of back taxes, they said.

The township took the property, hoping to have the taxes abated, they said. The county and school board only forgave one year in taxes, leaving the township with the remainder, they said.

At this point, they don’t know how much the final cost to the township will be, they said.

Please click here to view the article online.

Please click here to view proposed text of HB 795 [pdf].

Please click here to view a related Memo from the bill sponsor.

Arena Deal Gives City Tools on Foreclosed Homes, Unregistered Cars

Posted on September 13, 2018September 13, 2018 by Safeguard

A recent article released by the Milwaukee Journal Sentinel discussed Senate Bill 209, a piece of legislation that includes a “provision that forces buyers of foreclosed properties from Milwaukee County sheriff’s sales to record their deeds.

Arena deal gives city tools on foreclosed homes, unregistered cars

While negotiating a deal for a new downtown arena, Milwaukee officials saw an opportunity to resolve a couple of unrelated but nonetheless nagging problems:

How to force buyers of foreclosed properties to record their deeds with the county.
How to make sure car buyers are registered with the Department of Transportation.

Buried in the bill that provides $250 million in public subsidies for a new arena for the Milwaukee Bucks is a provision that forces buyers of foreclosed properties from Milwaukee County sheriff’s sales to record their deeds — an action that ensures the new owners will receive the property tax bills.

Another provision requires the seller of a vehicle to register the buyer’s identity with the Department of Transportation — an action that makes it easier for the city to track down those responsible for such things as unpaid parking tickets.

The arena bill passed 21-10 and now goes to the Assembly.

“This was real big deal to the city, so we brought it up during negotiations,” Patrick Curley, chief of staff for Mayor Tom Barrett, said in explaining why the foreclosure provision was attached to the arena financing. “We had a receptive audience, and we saw an opportunity to not just help downtown but to help the neighborhoods.”

The Wisconsin Bankers Association, which is opposing the foreclosure provision, has a different view.

“When we heard that the (foreclosure) provision was in there, we were very shocked,” said Rose Oswald Poels, the association’s president and chief executive.

“It is wholly unrelated to the economic decision” for arena financing.

Property tax bills at issue

Currently, most property buyers routinely file their titles with their county register of deeds even though no law requires they do so. The action provides notice to various governments about who owns a piece of land so officials know where to send tax bills and other vital correspondence.

A Milwaukee Journal Sentinel investigation published in May found that at least 14% of the third-party purchases at Milwaukee County’s weekly sheriff’s sales in the past two years were not recorded with the county. As a result, city and county officials were often unsure of who owned the properties so the tax bills continued to be sent to the former property owner. Those taxes — along with fines for building code violations — often go unpaid.

The foreclosure provision will require the Milwaukee County clerk to forward the deed to the register of deeds when a judge approves the sale of foreclosed property that was sold at a sheriff’s sale.

“The deed will automatically flow from the sheriff to the clerk of courts to the register of deeds,” said Gregg Hagopian, an assistant city attorney who helped draft the provision.

The provision covers only Milwaukee County sales.

The provision’s original language covered sheriff’s sales throughout the state. The banker’s association argued that the provision be limited to Milwaukee County and that lenders be exempt.

Oswald Poels said the association will continue to fight passage of the provision as it moves to the Assembly.

The provision should be introduced as a stand-alone bill so it could be reviewed and debated at public hearings and meetings, Oswald Poels said, noting there are some technical points in the provision that concern the banker’s association. Rep. Evan Goyke (D-Milwaukee) had planned to bring in a stand-alone bill.

“We want the Bucks to stay,” she said. “This has nothing to do with Bucks staying or leaving.”

The vehicle owner registration provision is less controversial. The city has about $14 million in uncollected parking citations to unregistered vehicles.

About 40% of all citations have been issued to vehicles without a registered owner, according to Jennifer Gonda, the city’s chief negotiator in the arena deal.

The provision will not only help the city go after major scofflaws, she said, but will help the city track salvage sales and hold the proper people accountable in accidents.

“It’s a safety provision,” she said.

Please click here to view the article online.

Please click here to view the full proposed text of Senate Bill 209 [pdf].

3-Year Foreclosure Ban Proposed for Sandy-Damaged Homes

Posted on September 13, 2018September 13, 2018 by Safeguard

Updated 1/22/16: The Asbury Park Press published an article titled Plan to ban Sandy foreclosures for three years vetoed.

Link to article

Link to State of New Jersey Office of the Governor bill action release

Link to the Governor’s recommendations to the Senate for S-2577

Legislation Update
June 22, 2015

As the recovery from Hurricane Sandy drags on for the thousands of residents still not yet back in their homes, a bill cleared a state Assembly panel on Monday afternoon that supporters said would offer storm victims “breathing room” while rebuilding their homes.

But an opponent of the measure, which proposes a three-year stay on foreclosure proceedings for certain Sandy-damaged properties, said the bill shifts a burden created by “a failure of the government” onto banks.

The Assembly Housing and Community Development committee on Monday approved the legislation, which would prevent lenders from foreclosing on homeowners waiting for funds through state-run rebuilding grant programs for three years. The bill would also allow homeowners waiting for grant money to qualify for a three-year forbearance period, during which time they would not have to make mortgage payments.

The committee on Monday cleared a substitute version of the bill (A4139) that was first introduced in February. A state Senate panel approved a similar bill in December.

Staci Berger, president of the Housing and Community Development Network of New Jersey, said residents are struggling to cover mortgage and rent payments as they wait for funds to rebuild.

“We want to make sure that people have the resources but also that they have the time,” she said. “What folks really need is some breathing room.”

The bill applies to homeowners eligible for money through the Reconstruction, Rehabilitation, Elevation and Mitigation, or RREM, grant program and the Low-to-Moderate Income Homeowners Rebuilding grant program. Homowners have been critical of the RREM program since it launched, complaining of lost paperwork and long delays.

Tammori Petty, a spokeswoman for the state Department of Community Affairs, noted that the state launched a rental assistance program for residents within those two programs in March.

“While there is nothing we can say to relieve the anxiety and hardship borne by those displaced from their homes, the above demonstrates that we are investing the time, energy and resources necessary to overcome all challenges in our Sandy recovery effort and we are focused on the tasks ahead,” Petty said in a statement.

Nearly 1,200 homes have been completed through the RREM program to date, Petty said. The program is expected to help roughly 8,300 homeowners.

Nancy Wirtz, a single mother of two from Ocean County, told the Assembly panel on Monday that she’s been displaced from her Forked River home since Sandy. She said she eventually qualified for the RREM program but construction has been stalled because of problems with a contractor. Now she said her mortgage company is threatening foreclosure.

“All we’re asking for is a chance to rebuild and start over,” she said. “I don’t want to lose my home.”

Michael Affuso, director of government relations for the New Jersey Bankers Association, told the panel that “what has happened to some people is a tragedy.”

But, he said, “that is a failure of the government. It is not a failure of banks. And yet in this case the banks are getting forced to carry the burden the government has failed to do themselves.”

Source: nj.com

Additional Resource:

A4139 (full text)

The Subprime Mortgage Crisis Wasn’t About Subprime Mortgages

Posted on September 13, 2018September 13, 2018 by Safeguard

On June 17, Fortune Magazine published an article discussing new research by Wharton economists Fernando Ferreira and Joseph Gyourko that presents an argument against the idea that subprime lending triggered the financial crisis.

The subprime mortgage crisis wasn’t about subprime mortgages

New research challenges the conventional wisdom on the financial crisis.

In the years following the financial crisis, a cottage industry arose that tried to explain just what happened to the American economy and the financial system.

Early on in the process, journalists zeroed in on one set of villains: subprime lenders and the supposedly irresponsible borrowers who were their customers. We were regaled with stories of mortgage lenders like Countrywide handing out loans that borrowers couldn’t possibly repay, and then selling them on to investment banks, who packaged them into “toxic” bundles like Goldman Sachs’ infamous Abacus collateralized debt obligation.

When these subprime borrowers began to default, so the narrative goes, the dominoes began to fall, eventually helping to send the entire mortgage market, U.S. financial system, and global economy into crisis.

At the time, the press spent a lot of energy scrutinizing subprime borrowers and lenders, based on the fact that in the early days of the crisis, the rate and absolute number of subprime foreclosures were much higher than foreclosures in the prime market. It was around this time that CNBC’s Rick Santelli gave his famous rant against talk of bailing out underwater homeowners that helped launch the Tea Party movement, calling the folks who were at risk of foreclosure “losers.”

Furthermore, much of the reforms instituted since the financial crisis have centered around increasing scrutiny of mortgage lending, to make sure that these sorts of irresponsible loans aren’t made again.

But if journalism is the first-draft of history, then it’s about time for a second draft. In a new working paper by Wharton economists Fernando Ferreira and Joseph Gyourko, the authors argue that the idea that subprime lending triggered the crisis is misguided. The paper looks at foreclosure data from 1997 through 2012 and finds that while foreclosure activity started first in the subprime market, the foreclosure activity in the prime market quickly outnumbered the number of subprime foreclosures.

The following chart shows the total number of foreclosures and short sales per quarter in various classes of mortgages:

While subprime borrowers default at a higher rate than prime borrowers, Fierra said in an interview with Fortune that the data shown above suggest that the foreclosure crisis would have happened even in the absence of such risky lending. “People have this idea that subprime took over, but that’s far from the truth,” says Ferreira. The vast majority of mortgages in the U.S. were still given to prime borrowers, which means that the real estate bubble was a phenomenon fueled mostly by creditworthy borrowers buying and selling homes they simply thought wouldn’t ever decrease in value.

We can draw two conclusions from this data. One is that your chances of being foreclosed upon in the past decade was more a matter of timing than anything else. If you were a subprime borrower in, for instance 2002, who bought a bigger house than a more prudent and creditworthy borrower would have bought, chances are you would have been fine. But a prime borrower who did everything right—bought a house he could easily afford, with a large downpayment—but did so in 2006 would have had a higher chance of defaulting than the subprime borrower with better timing.

Since whether you were hurt by the crisis had more to do with luck than anything else, Ferreira argues we should rethink whether doing more to help underwater homeowners would have been a good idea.

The research also offers some sobering policy implications. Ferreira’s data show that even with strict limits on borrowing—say, requiring every borrower to put 20% down in all circumstances—wouldn’t have prevented the worst of the foreclosure crisis. “It’s really hard for certain regulations to stop the process [of a bubble forming],” Ferreira says. “I really wish my research had showed that it’s all about putting down 20% and all problems are solved, but the reality is more complicated than that.”

Furthermore, we still don’t have the tools to understand the cycles of real estate prices, or to recognize bubbles, in any asset class, before they form. So it would be a mistake to think that any regulatory reform will offer fool-proof protection against the next financial crisis.

The booms that capitalism confers on us, it seems, will inevitably be followed by busts.

Please click here to view the article online.

Proposed New York Senate Bill S4781-2015

Posted on September 13, 2018September 13, 2018 by Safeguard

On April 15, NY S4781-2015 was introduced in the Senate and referred to the Housing, Construction and Community Development Committee.

BILL NUMBER:S4781

TITLE OF BILL:

An act establishing the “New York state abandoned property neighborhood relief act of 2015”; and to amend the real property actions and proceedings law, in relation to the duty of the mortgagee or its loan servicing agent to maintain property secured by delinquent mortgage and in relation to special foreclosure proceedings for vacant abandoned property; and to amend the state finance law, in relation to establishing the abandoned property neighborhood relief fund

PURPOSE:

To help community residents and municipalities throughout the State better address the growing problem of vacant and abandoned residential properties by creating a statewide registry of such properties and imposing a duty on mortgagees and their loan servicing agents to report these properties to the registry and take earlier (pre-foreclosure) action to identify, secure and maintain them.

SUMMARY OF SPECIFIC PROVISIONS:

Section 1 establishes the title of the Act as the “New York State Abandoned Property Neighborhood Relief Act of 2015.”

Section 2 amends section 1307 of the Real Property Actions and Proceedings Law to: create a definition of “vacant and abandoned” residential real property; expand the existing duty of a mortgagee to maintain vacant residential real property to include pre-foreclosure “vacant and abandoned” residential property as defined in the bill, and to expand such duty to the mortgagee’s loan servicing agent; establish a periodic inspection requirement for mortgagees and loan servicing agents to determine if residential real property subject to a delinquent mortgage is currently occupied; and make it unlawful for a mortgagee or loan servicing agent, or a person acting on their behalf, to enter residential real property that is not vacant or abandoned for the purpose of forcing, intimidating, harassing or coercing a lawful occupant thereof to vacate the property in order to render it vacant and abandoned.

Section 3 adds a new section 1307-a to the Real Property Actions and Proceedings Law to: require the Attorney General to establish and maintain a statewide electronic Vacant and Abandoned Property Registry that shall be accessible to local officials across the State; require mortgagees or their agents to promptly submit to the statewide Registry information about vacant and abandoned properties, including but not limited to the current name, address and contact information for the lender or servicer responsible for maintaining the property, whether a foreclosure action has been filed, and any updated material information when it becomes available; require mortgagees or their loan servicing agents to provide prompt written notice to mortgagors, when the mortgage on their residential real property is three monthly payments past due, of the mortgagor’s right to occupy the property until he or she is ordered to leave by a court of competent jurisdiction; require the Attorney General to take appropriate measures to ensure that the Federal National Mortgage Association and

the Federal Home Loan Mortgage Association are promptly notified when certain properties are added to the electronic registry; authorize a municipality wherein vacant and abandoned residential property is located to intervene as of right in a foreclosure action involving the property for the purpose of requesting injunctive relief to ensure the property is maintained in accordance with law and that the foreclosure action is timely prosecuted; require the Attorney General to establish and maintain a toll-free hotline that community members concerned about vacant and abandoned properties can call to report such properties and to obtain information relating to such properties, including but not limited to whether a specific property is listed on the Attorney General’s statewide Vacant and Abandoned Property Registry and, if so, the identity of the mortgagee or loan servicing company responsible for maintaining the property; and authorize the Attorney General, and any affected locality upon written notice to the Attorney General, to seek injunctive relief and/or civil penalties against mortgagees and/or their agents for violations of RPAPL sections 1307 and 1307-a

Section 4 requires that a part of the Supreme Court be devoted to foreclosure actions involving property alleged to be vacant and abandoned.

Section 5 adds a new section 1308 to the Real Property Actions and Proceedings Law to establish a special foreclosure proceeding for vacant and abandoned residential real property.

Section 6 adds a new section 91-g to the State Finance Law to create the Abandoned Property Neighborhood Relief Fund, to be comprised of all civil penalties collected by the Attorney General in enforcement actions under RPAPL section 1307-a(3)(c), and to establish a procedure for the disbursement to localities of Enforcement Assistance Grants from available monies in such fund to aid such localities in the enforcement of RPAPL sections 1307 and 1307-a.

Section 7 establishes an effective date of 90 days after the act shall have become a law.

EXISTING LAW:

Section 1307 of the Real Property Actions and Proceedings Law currently requires a plaintiff in a mortgage foreclosure action who obtains a Judgment of Foreclosure and Sale involving residential real property that is or becomes vacant to maintain the property until such time as ownership of the property has been transferred through the closing of title in foreclosure or other disposition, and the deed is duly recorded.

JUSTIFICATION:

Vacant and abandoned residential properties securing delinquent mortgages fall into disrepair and harm neighboring properties and the surrounding community. These properties are a blight on neighborhoods because they are often boarded up, inhabited by squatters or used for criminal purposes. When a vacant and abandoned property is not maintained for an extended period of time, there is a decline in the community’s real estate market and the state’s property tax base.

There is also an increased likelihood of crime in and around the property. There are instances of such properties being used by criminals to manufacture and/or distribute illegal drugs. Municipalities are often forced to expend taxpayer funds to prevent a vacant and abandoned property from becoming a public hazard. If a municipality is forced to care for a significant number of vacant and abandoned properties, its budget can be depleted quickly.

Current law, enacted in 2009, imposes a duty on plaintiff-mortgagees to maintain vacant residential properties only after a Judgment of Foreclosure and Sale has been entered. Unfortunately, this law has proven inadequate to address the growing number of vacant and abandoned properties falling into disrepair across New York State. A survey in one jurisdiction showed that most vacant and abandoned properties were not subject to foreclosure actions and, if they were, the cases had not proceeded to Judgment of Foreclosure and Sale. In many instances, the plaintiff-mortgagee abandoned the foreclosure effort. In others, the plaintiff-mortgagee sought to vacate its own Judgment of Foreclosure and Sale, bringing the property outside of the existing maintenance requirement imposed on the plaintiff-mortgagee by statute. There is also evidence showing that current and former New York homeowners have been misled into believing they need to leave their homes earlier in the foreclosure process than they actually have to, resulting in even more vacant and abandoned properties.

In response to this growing threat to communities across New York State, the Abandoned Property Neighborhood Relief Act of 2015 will ensure that homeowners are provided with early notice that they are legally entitled to remain in their homes until ordered to leave by a court and will require mortgagees and their loan servicers and agents to identify, secure and maintain vacant and abandoned properties much earlier in the mortgage delinquency timeline. It will also require that they electronically register these properties with the newly-created Vacant and Abandoned Property Registry to be established and maintained by the Attorney General. The Registry, in turn, will provide a much needed and readily available source of information on vacant and abandoned residential properties to local officials throughout the State, and will be supplemented by a toll-free hotline that community residents can use to report suspected vacant and abandoned properties to the Attorney General and receive information regarding the status of registered properties, including the identity of the mortgagee or agent responsible for maintaining them. The Act also would establish in the State Finance Law a new Abandoned Property Neighborhood Relief Fund, to be comprised of civil penalty monies collected by the Attorney General in enforcement actions under the Act, which monies would be used to fund Enforcement Assistance Grants to aid localities in their enforcement of the Act.

Please click here to view the full text of S4781-2015 online.

Pasco County, FL Considers Amendment to Vacant Property Registration Ordinance

Posted on September 13, 2018September 13, 2018 by Safeguard

On May 28, the Tampa Bay Times released an article titled To aid code enforcement, county plans change to foreclosure rules.

To aid code enforcement, county plans change to foreclosure rules

NEW PORT RICHEY – It seemed like a good idea at the time: Tell everyone this home is in foreclosure and here’s who to call if the house falls into disrepair.

The county rule requires these public notifications to be posted at the front of the houses, usually in windows facing the streets. The intent is to keep a handle on neighborhood blight. In 2010, the year the County Commission adopted its registry ordinance, there were 14,000 foreclosure cases pending in Pasco and new filings reached 6,374 that year.

But the scarlet letter turned into a red flag carrying unintended consequences. The public notification brought with it instances of squatters and vandals taking liberties with the unoccupied houses.

“That is, you pretty much told everybody the house is vacant,” said Joaquin Servia, development review manager for Pasco County. “There’s nobody around, come in and help yourself to whatever is around.”

So, the ordinance, which requires lien holders to register the property with the county after filing the foreclosure, is getting a proposed tweak. The properties still must be registered and the registry certifies whether the house is abandoned, vacant or showing evidence of vacancy and requires the loan holder to secure and maintain the premises.

Gone will be the requirement for the public notification under a proposed change to the ordinance. More importantly, however, the county wants to expand the rules to make them applicable even after the property is sold.

Servia called the current ordinance “the most important tool that code enforcement has in dealing with abandoned and vacant property.” But, he said, the code compliance problems don’t end just because the property is sold to the lender.

As a result, the county is proposing to expand the ordinance to require registration and maintenance obligations for properties owned by the lender after the foreclosures.

“It’s bridging that gap between the end of foreclosure and ultimately when that property is sold to an individual,” Servia told county commissioners last week.

Commissioner Kathryn Starkey agreed.

“We know its not going to be pleasant, but we need to get a handle on these properties,” she said about mounting code enforcement problems in some Holiday neighborhoods.

In the first three months of 2015, 574 new foreclosure cases were filed in Pasco Circuit Court, a nearly 17 percent decline from the previous year. But, there is still plenty of pending work for code enforcement officers. Over a five-year period ending in 2014, the Pasco courts saw more than 23,500 foreclosure cases filed while just 15,000 of the properties were sold.

The commission is scheduled to consider the ordinance amendment after a June 23 public hearing at the West Pasco Government Center in New Port Richey.

Please click here to view the article online.

Oversight of Mortgage Servicers Increased in Hawaii

Posted on September 13, 2018September 13, 2018 by Safeguard

On June 4, National Mortgage News (The Honolulu Star-Advertiser) released an article discussing Senate Bill 1093, newly enacted by Governor David Ige.

Oversight of Mortgage Servicers Increased in Hawaii

A fast-growing segment of the mortgage industry engaged in foreclosures is subject to new regulatory oversight in Hawaii under a state law enacted last week by Gov. David Ige.

The governor signed Senate Bill 1093, which increases state regulation of mortgage servicers.

Mortgage servicers are companies that handle management aspects of home loans, including processing payments and dealing with defaults. Servicers can be banks and other lenders that own loans, as well as firms contracted by loan owners.

Practices by loan servicing firms that aren’t part of the more stringently regulated banking industry have attracted heightened concern as nonbank mortgage servicing has dramatically grown in recent years.

“It is important to strengthen Hawaii’s law now, given the nationwide surge in nonbank mortgage servicers, the types and gravity of complaints against the industry, and the serious potential for harm to consumers,” Iris Ikeda, Commissioner of Financial Institutions at the state Department of Commerce and Consumer Affairs, said in written testimony on the bill.

New state regulations imposed under SB 1093 include a requirement that mortgage servicers make “reasonable and good-faith efforts” to modify loans and avoid foreclosure.

If a loan modification is denied, the law requires that a notice in boldface type be sent to the borrower stating: “If you believe your loss mitigation option request has been wrongly denied, you may file a complaint with the state Division of Financial Institutions.” A telephone number and web address for the agency also must be included.

The law also bars a mortgage servicer from requiring that a borrower waive legal action as a condition of a loan modification, forbearance or repayment plan.

Other requirements address fees, mortgage payment processing, bonding, statement information, licensing, record keeping and the handling of consumer complaints and inquiries.

For instance, the law states that a fee may be collected only if it is clearly and conspicuously disclosed by the loan instruments and it is for services actually rendered.

The law also requires that late principal and interest payments are credited before any late charge is collected, and that no penalty charges may be imposed solely for late fees or delinquency charges assessed on an earlier payment if the borrower is current on monthly mortgage payments.

Ikeda said in her testimony that the provisions should not have a substantial negative impact on mortgage servicing companies since many of the firms have already adjusted their practices following concerns raised by state examiners and a major mortgage company settlement agreement in 2012.

Still, the provisions were deemed necessary in part because of continuing consumer complaints, industry expansion and difficulty for Hawaii consumers to obtain appropriate attention from mainland mortgage servicers that have no physical presence in Hawaii.

Hawaii consumers lodged 516 complaints in a federal Consumer Protection Financial Bureau database over a 25-month period ending Jan. 31, according to Ikeda’s testimony. She said nearly all the Hawaii complaints concerned loan servicing issues.

“Consumer problems with mortgage servicers clearly continue,” Ikeda wrote. “This is an important bill that will enable state regulators to protect homeowners dealing with increasingly critical concerns about the mortgage servicer industry and its practices.”

Ikeda said nonbank specialty servicers that typically handle troubled loans service about $1.4 trillion worth of loans in a $10 trillion market, or 14% of the industry.

Neal Okabayashi, a representative for the Hawaii Bankers Association, estimated that nonbank servicers will own an additional 10% of the market in the next two to three years, according to his written testimony.

The Hawaii Bankers Association supported the bill, and said it will fill a gap in the regulatory framework for mortgage servicing.

The only other written testimony on the bill came from the Mortgage Bankers Association of Hawaii, which supported the bill’s intent; the Hawaii Credit Union League, which said the bill would bring needed clarity to mortgage servicing rules; and Harvey Arkin, an individual who said it took him two years to obtain a trial loan modification after being denied multiple times due to errors by his loan servicer.

“Poor mortgage servicing can cause consumers extreme stress and financial harm,” Ikeda said in her testimony. “If the servicer refuses to fairly consider loss mitigation options for homeowners in financial distress, homes are needlessly lost to foreclosure, devastating families and their financial futures.”

Statistics from the state Judiciary show that foreclosures are in a second consecutive year of decline but are still an issue affecting more than 100 residents each month.

The number of new foreclosure lawsuits filed in state court was 210 in April, 174 in March, 147 in February and 116 in January. These figures are down from the same months last year: 211, 231, 250 and 228, respectively.

Please click here to view the article online.

New York SB 4498: Provides for Summary Action to Foreclose Upon Vacant and Abandoned Residential Real Property

Posted on September 13, 2018September 13, 2018 by Safeguard

On May 6, NY SB 4498 was advanced to a third reading. If enacted, the bill would amend the Real Property Actions and Proceedings Law for an expedited procedure for abandoned property foreclosure for residential properties.

BILL NUMBER: S4498

TITLE OF BILL:

An act to amend the real property actions and proceedings law, in relation to summary action to foreclose mortgages on vacant and abandoned residential property

PURPOSE OF BILL:

This allows for an expedited procedure for abandoned property foreclosure for residential properties. Through this process, once the property has been deemed abandoned by the court, plaintiffs would be authorized to move for judgment and sale after a foreclosure complaint is filed and the time for all defendants to answer has expired.

SUMMARY OF PROVISIONS:

The bill would create a new § 1308 to the Real Property Actions and Proceedings Law entitled “Abandoned Property Foreclosure Summary Procedure.”

* Section 1308(1)(a) would define “vacant and abandoned” residential property under the new Section as that which a mortgagee proves, through reports, affidavits, affirmations, photographs or otherwise, to the satisfaction of the Court, that the property is, vacant and has been abandoned. To do so, the property must fit the criteria of at least two of the factors listed in the bill. Furthermore, property can only be deemed vacant and abandoned if the Court finds that the property is not occupied by a tenant pursuant to a written lease agreement entered into prior to the foreclosure action.

* Section 1308(1)(b) lists the factors that would prevent a residential property from being declared vacant or abandoned including: the building is under construction or renovation, the building is occupied on a seasonal basis, or the building is the subject of a court action such as probate, quiet title or ownership dispute.

* Section 1308(2) describes how a plaintiff could allege in its complaint that a property is vacant and abandoned. This would allow for bypassing the referee process and/or settlement conference (where appropriate) at the start of the action. Should the information regarding proof of vacancy and abandonment arise after the initiation of the foreclosure action, the bill lays out the method at each stage of the matter, including for those properties defined as a home loan under RPAPL § 1304(5)(a).

* Section 1308(3) provides that a judgment of foreclosure and sale cannot be entered if at any time the court finds that the property is not vacant and abandoned or if the mortgagor files an answer, appearance or other written objection that contests the status of the property as vacant and abandoned.

* Section 1308(4) provides that should the judgment of foreclosure and sale be denied pursuant to the court’s finding that the property is

not, in fact, vacant and abandoned, then all rights and procedures available would be restored.

* Section 1308(5) provides that the Section would not pre-empt, reduce or limit any rights for a locality’s ability to enforce laws with respect to property maintenance.

* Section 1308(6) provides an immediate effective date.

JUSTIFICATION:

The longer an abandoned home stays in foreclosure, the greater the chances of blight, resulting in deterioration in value to the property itself and the neighborhood at large. The longer an abandoned or vacant property languishes in foreclosure the more likely it will drag down the neighborhood it is in as well, through delinquency, blight and distressed pricing in those areas. High concentrations of vacant properties in certain parts of the State are taking a heavy toll on our towns and communities.

This bill would apply to vacant and abandoned residential properties pursuant to a newly articulated definition in the bill. Such property would be deemed vacant and abandoned when a mortgagee can prove so according to several factors listed in the bill and pursuant to court finding. The bill would allow for bypassing of the referee stage and/or settlement conference stage (where appropriate) of the foreclosure process for such properties. In such cases, after a foreclosure complaint is filed and the time for all defendants to answer has expired, the plaintiff would be authorized to move for judgment and sale, with the court compelled to compute the sum due in the judgment.

Please click here to view the full text of SB 4498 online.