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OH SB 16 Trespass Immunity

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

On September 2, The Daily Reporter published an article titled Legislation Would Encourage Cleaning Blighted Properties.

Link to introduced bill. Following is the aforementioned article.

Legislation would encourage cleaning blighted properties

The mayor of Wellsville, the Cincinnati City Council and the Ohio Farm Bureau have joined a Canfield lawmaker in pushing to exclude remediation efforts from criminal trespassing laws.

“Wellsville, Ohio is on the tips of many tongues regarding the oil and gas boom,” said Mayor Susan Haugh. “We are located on the Ohio River and have made great strides to become self-sufficient by using our river, rail and highways to promote economic development. Wellsville is about growth and how a small community survived after hitting rock bottom. We have one major issue though, we are unable to provide adequate housing and/or attractive neighborhoods during this growth.” In testimony before the Senate Civil Justice committee, Haugh said tax and bank foreclosures have littered every village block. “Some of these foreclosures have sat empty for years, with no improvement and/or attempts to auction off in sight,” she said. “Not many would ever consider moving into a neighborhood with this type of blight. Senate Bill 16 will help with this issue.”

The bill, sponsored by Sen. Joe Schiavoni, provides that a person is not criminally or civilly liable for trespassing on certain abandoned land or similar places of public amusement if the person enters or remains on the land or place of public amusement to remediate it. The proposal is a reintroduction of Senate Bill 109 from the 129th General Assembly. “It will allow us to, at minimum, cut/weed these properties and possibly add a little paint. Yes, we have ordinances in place but, when dealing with the government and banks, our ordinances seem to have little, if any, influence on their actions,” Haugh said, adding that the conditions are pushing out tax-paying residents. “Our police officers are continually going into these properties and removing strung out addicts who are lying in piles of dirty needles and used condoms. We are tired and fed up. We want our neighborhoods back.” Tony Seegers, Ohio Farm Bureau director of state policy, said the organization worked with Schiavoni to alleviate its concerns with SB 109. “These included clarification that there would be no reimbursement for cost or expense of remediation unless a prior agreement is made and owner immunity from liability to persons who enter to remediate the land,” he said. “Abandoned property in disrepair can bring down land values and be an eyesore for the community. SB 16 will allow citizens to remediate such property while giving property owners safeguards against civil actions.” The proposal also prevents anyone who remediates abandoned property from obtaining a right to possession of the land. On behalf of P.G. Sittenfeld, a member of the Cincinnati City Council, Ben Frech testified in support of SB 16. “We have seen some of our most historic and beloved neighborhoods be subjected to unsafe and poorly-maintained vacant homes, which have not only brought down property values but also the overall quality of life for our citizens,” he said, adding that the city council unanimously passed a resolution endorsing the bill and has taken its own steps to reduce blight. “We see SB 16 as another huge step forward in this fight, and a valuable tool to help limit the impact that vacant and blighted properties have on our communities.”

Frech said there are various reasons why local and state governments are unable to manicure the vacant properties in their communities. “Though, as long as this is the case we should be offering our citizens the right to do what we are unable to: clean up their neighborhoods and maintain their property values and quality of life,” he said. “SB 16 is most likely not the type of legislation that any elected official hopes to have to write, debate or pass through … but it is a bill that represents the times we are in and one that offers solutions to a problem that has been going on too long and in far too many neighborhoods across Ohio.” Daniel Matthews, a Youngstown resident, also offered proponent testimony for the bill. “I purchased a nice, two-story brick colonial home on the south side of Youngstown, in a nice, thriving working-class neighborhood. I knew my neighbors by name. We had annual block picnics. It was a clean, safe place to live,” he said. “Over time things began to change. My neighborhood remains one of the nicer neighborhoods in Youngstown, but blight and crime are trying to take us over. My house alone is surrounded by six abandoned properties, not to mention the adjacent streets.” Matthews said he’s a member of a neighborhood organization that wants to take an active role in cleaning up their streets. “We’ve waited long enough for someone else to act,” he said. “It’s time to do it ourselves but fear of trespassing laws hinders us. We are fighting for survival. We are fighting for our city. We need a law that allows us the opportunity.” SB 16 specifies that remediation could only occur during daylight hours, in an effort to prevent squatters from obtaining immunity by claiming they were remediating. The proposal also would exempt abandoned manufactured homes, mobile homes and trailers from being eligible for remediation. The bill has not been scheduled for additional hearings.

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About Safeguard
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.

More Homes Are Rented

Posted on September 13, 2018October 29, 2018 by Safeguard

On October 20, USA TODAY published an article titled In More Homes, the Roof Overhead is Rented.

In more homes, the roof overhead is rented

Many metro areas have seen significant increases in rented single-family homes since 2006, Census Bureau data shows.

In the aftermath of a historic housing bust, rented single-family homes are on the rise in communities from coast to coast.

At least a fifth of all occupied single-family homes were rentals last year in 32 of the nation’s top metropolitan regions, according to a USA TODAY analysis of U.S. Census Bureau data. That’s up from seven metros in 2006.

The growth reflects changes brought by the housing boom and bust and the enduring financial hardships imposed by the recession. Millions of homeowners lost homes to foreclosure and were forced to become renters, while others delayed homeownership.

Nationwide, 18% of occupied single-family homes last year were rentals, up from nearly 15% in 2006, show data based on the American Community Survey, an annual Census Bureau survey.

The metros with the most growth in single-family rentals are those where foreclosures were most rampant.

Among them were Las Vegas, where almost 29% were rentals, up more than 10 percentage points from 2006.

Florida’s Cape Coral area was more than 25%, another 10-point gain.

Stockton, Calif., was about 24% in 2006 — now it’s above 32%, the highest share among the 100 metro regions in USA TODAY’s study.

Metros outside the top foreclosure hot spots have also seen larger growth in single-family rentals than the national average, including Memphis, Dallas, Denver and Seattle, the data show.

In those metros, more homeowners may be turning homes into rentals to meet strong demand, says Svenja Gudell, Zillow economist.

Single-family rents in Denver were up 5.6% in August year-over-year, vs. a 1.9% national rise, Zillow data show.

“There are a lot of folks who’ve decided to rent homes out, vs. sell,” says Kim Klapac, Colorado Springs Realtor.

City officials say they prefer rented-out homes to vacant ones, which lead to blight. In many cases, today’s single-family home renter lost a home to foreclosure.

“There’s a lot of good-quality renters out there,” says Micah Runner, interim economic development director in Stockton. “The issue can be when the homes are owned by people outside of the area and it’s harder to get them to fix stuff.”

More rentals may also lead to more classroom turnover in local schools, because renters tend to move more often than owners, says Southern California research economist John Husing.

Wealth generation will also be affected, says Michael Orr, real estate expert at the W.P. Carey School of Business at Arizona State University.

“A good slice of our owner occupants have become tenants against their will. That’s not a good thing,” Orr says.

Phoenix was one of the first cities targeted by institutional investors, who are spending billions turning single-family homes into rentals alongside mom-and-pop investors.

Since Phoenix home prices bottomed in 2011, they’re up about 40%, according to Standard & Poor’s Case-Shiller data. That makes it harder for owner-occupants to now buy in, Orr says.

To view the online article, please click here.

Impact of NV Short Sale Law Unclear

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

On October 7, Mortgage Daily published an article titled Impact of Nevada Short Sale Law Unclear.

Please click here for prior reporting.

Impact of Nevada Short Sale Law Unclear
Senate Bill 321 took effect Oct. 1

Nevada’s “Homeowner’s Bill of Rights” was pitched as a way to help underwater borrowers short sell their homes to family, friends or investors, then rent or buy them back.

But now, some are questioning whether the law really gives homeowners the upper hand on banks, which frown upon such prearranged deals.

Senate Bill 321, which took effect Oct. 1, was intended to ease the rules on “arm’s length” agreements, which many financial institutions have required in recent years to ensure that owners retain no interest in their homes once they sell.

But real estate lawyers disagree about how to interpret sections of SB321, and many say the law is vague and confusing. Critics argue it is ineffective. Even the bill’s lead sponsor, Sen. Justin Jones, of Las Vegas, says the new rules about arm’s length agreements carry little weight.

The law is so disputable it may land in court. A judge could be called on to decide what exactly the law says. And depending on what he or she determines, homeowners could end up filing a class-action lawsuit against the banks or being sued by them for mortgage fraud.

In a short sale, a bank agrees to sell a house for less than what’s owed on the mortgage. In exchange, lenders hoping to ensure a fair price often make homeowners sign an arm’s length agreement to certify that their deal is with someone they didn’t know beforehand and doesn’t include a buyback or lease-back option. If sellers lie on the form, they can be jailed for fraud.

SB321 says that state law cannot require arm’s length transactions in a short sale, nor can state law block a short sale that is not arm’s length.

Some lawyers and real estate agents interpret the law to mean that banks can’t force people to sign arm’s length agreements, meaning borrowers can short sell to anyone they want, as long as the bank approves.

Lenders still can request an arm’s length agreement, “but you don’t have to sign it,” said Nevada Bankers Association CEO Bill Uffelman.

Keith Lynam, legislative chairman of the Nevada Association of Realtors, which pushed for SB321, said the law’s intent is “very clear” but admits “there are some issues with the vagueness.” As Lynam sees it, the law dictates that homeowners are not required to sign arm’s length agreements and lenders cannot block short sales anymore simply because they are between family or friends.

However, attorney Jamie Cogburn, whose firm handles 75 to 100 short sales a month, said SB321 is up for interpretation. He said the “weirdly worded” law could be taken to mean that banks can decide whether or not to impose an arm’s length agreement, which was the case before the law was drafted.

Banks usually want arm’s length agreements but aren’t required by law to get them. Some banks don’t ask for them at all.

“Frankly, it can go either way,” Cogburn said.

Attorney Judah Zakalik, a partner at Peters & Associates, said SB321 “won’t do anything” to change the way arm’s length agreements are handled.

Lawyer Rory Vohwinkel called the law “extremely vague.” He said banks still can require arm’s length agreements, but SB321 also allows homeowners to short sell to someone they know.

Real estate agents wanted stronger language in the bill to force banks to accept non-arm’s length short sales, but it was rejected over concerns it might violate the Nevada and U.S. constitutions, Jones said.

Instead, SB321 now essentially says the state can’t outlaw short sales to family or friends but allows banks to reject those deals.

“Does it have a lot of teeth?” Jones said. “No.”

A judge might need to get involved to determine how the law should be interpreted. Such a decision could affect thousands of people.

Almost half of valley homeowners with mortgages were underwater in the quarter ending June 30. The rate was highest among major U.S. metropolitan areas and more than double the national average of about 24 percent, according to Zillow.

If banks continue to impose arm’s length agreements and a judge later rules they shouldn’t have, lenders could face a class-action lawsuit from homeowners who were forced to sign the document. If a judge were to rule that banks can, in fact, require the agreements, lenders could sue, claiming homeowners colluded with friends, family or investors to sell their debt-laden houses below market value.

To view the online article, please click here.

Hurricane Sandy One Year Later

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

On October 30, New York Daily News published an article titled Hurricane Sandy One Year Later.

HURRICANE SANDY
one year later

Even with surge in foreclosures post-Sandy, real estate prices in Queens, Brooklyn rise
In hurricane-ravaged Queens foreclosure activity was up 61%, while the median price of a home went up 16%.

One year after Hurricane Sandy, New York area homeowners are drowning under a wave of foreclosure notices.

In a sign that Sandy victims can’t keep up with their mortgage payments or are choosing to abandon their battered homes, foreclosure activity in New York City and Long Island surged 33% in the first nine months of the year, compared with the same period last year, according to a special report from RealtyTrac.

“People whose homes were damaged are making the decision to walk away because it doesn’t make financial sense to keep making those mortgage payments,” RealtyTrac vice president Daren Blomquist told the Daily News.

The survey counted all types of foreclosure notices: default notices – which come early on when homeowners skip payments – scheduled auctions, and bank repossessions.

Not surprisingly, the two boroughs that got hit the worst, Queens and Staten Island, saw the biggest foreclosure notice surge. Activity was up 61% in Queens and 40% in Staten Island.

The number of homes hit with foreclosure papers in the Bronx rose 39%. The increase in Brooklyn was 28%.

“When there is a financial crisis, one of the first bills that doesn’t get paid is the mortgage,” Emmett Laffey, CEO of Laffey Fine Homes International, a real estate brokerage in Greenvale, L.I., told The News.

Manhattan was the only borough surveyed by RealtyTrac where foreclosure activity was down post-Sandy. Foreclosure notices fell by 21%, even though lower Manhattan saw significant flooding.

That implies that Sandy victims in Manhattan were more financially stable and those who couldn’t make their payments were able to find buyers for their homes.

“Manhattan has the best buyer pool in the U.S.,” Laffey said.

But even though Sandy has put more people at risk of losing their homes, the rise in foreclosures hasn’t been enough to put a dent in an overall strong local real estate market.

In fact, the median price of a home in September was up 16% in Queens and up 12% in Brooklyn compared with September 2012.

The increases were smaller in Staten Island, where property values rose by 3% and in Nassau County, where they were up 1%.

Foreclosed homes sold by banks are going fast.

“There is a line of buyers to buy those homes because they are priced under the market,” Laffey said. “They are selling within a matter of days.”

A separate StreetEasy report showed that Manhattan neighborhoods hit by Sandy bounced back far more quickly than other parts of the city slapped by the storm.

The volume of closings in two Manhattan flood zones jumped 64% in the quarter immediately following the storm, compared with the year-ago period.

In contrast, closings in Brooklyn were down 22% during that period. They dropped 30% in Queens.

To view the online article, please click here.

Foreclosure Haunts Next Home Purchase

Posted on September 13, 2018October 29, 2018 by Safeguard

On October 17, The Wall Street Journal published an article titled Foreclosure Haunts Next Home Purchase.

Foreclosure Haunts Next Home Purchase

Affluent home buyers attempting to get back into real estate after defaulting on their home loan are finding that few lenders are willing to work with them.

Jumbo borrowers who went into foreclosure a few years ago are learning the hard way: You can’t go home again.

Affluent home buyers attempting to get back into real estate after defaulting on their home loan are finding that few lenders are willing to work with them. Those that do often impose long waiting periods, higher down payments and higher interest rates.

Since spring, lenders say they have increasingly been hearing from would-be buyers who went through foreclosure. “We get the calls routinely,” says Al Engel, executive vice president at Valley National Bank, based in Wayne, N.J.

Callers include self-employed borrowers whose income dropped during the recession, causing them to fall behind on their mortgages, but who have since financially recovered. Also affected are borrowers who walked away from their homes after their values plummeted and owed more on their mortgage than the house was worth. Now that home values have stopped falling in most housing markets, they want back in.

Terri Conrad and her husband saw their 4,500-square-foot, five-bedroom home in Carbondale, Colo., foreclosed on last year. They purchased the home for $1.25 million in 2007, but its value had dropped to roughly $700,000 by 2012. Ms. Conrad, who manages finances of affluent families, says the couple tried refinancing but was denied. Although they could afford the payments, they decided to walk away because they didn’t want to keep paying for a home that was worth significantly less than the loan. They are now renting in Houston and plan to wait at least a couple of years before applying for a home loan again. “I’m worried about who’s going to give me a mortgage,” she says.

Most lenders who offer private jumbo mortgages, which start after $417,000 in most parts of the country and at $625,501 in pricier housing markets, remain very selective and limit themselves to borrowers with the strongest credit profiles.

Foreclosures stay on credit reports for seven years from the time homeowners default on their mortgage. What’s more, a foreclosure can lower a borrower’s credit score by 100 points, says John Ulzheimer, a former manager at FICO, FICO +0.62% Fair Isaac Corp. U.S.: NYSE $57.11 +0.35 +0.62% Oct. 21, 2013 10:54 am Volume (Delayed 15m) : 15,868 P/E Ratio 24.21 Market Cap $2.00 Billion Dividend Yield 0.14% Rev. per Employee $319,305 08/05/13 What It’s Like Being a Middle … More quote details and news » FICO in Your Value Your Change Short position the credit score used by most lenders. Borrowers who were previously always on time with payments would see a bigger drop. For instance, someone with an 820 FICO score (FICO scores range from 300 to 850) could drop to 580 following foreclosure, he says. That borrower could need more time to work his or her way back to a top score before getting a mortgage.

Separately, many affluent borrowers went into foreclosure later largely because they were able to tap their savings to pay their mortgage. Foreclosures on homes worth over $1 million peaked in 2011, while foreclosures on homes worth less than $1 million peaked in 2009, according to RealtyTrac, which tracks real-estate data. By delaying foreclosure, they will likely have to wait—possibly until after housing has fully rebounded—to get a home loan.

Borrowers who intentionally default—the ones who walked away from their homes—are less likely to be approved for another mortgage soon after. Lenders that originate private jumbos often follow guidelines set by Fannie Mae and Freddie Mac, which require strategic defaulters to have re-established their credit profile for at least seven years after foreclosure in order to get a mortgage.

But experts say more flexibility among lenders could emerge in the next year. A recent change allows certain borrowers to become eligible for mortgages backed by the Federal Housing Administration in as little as one year after their foreclosure. Previously the waiting period was at least three years. “This may be an influence on the private lenders to loosen a little bit on their waiting period,” says Daren Blomquist vice president at RealtyTrac.

Borrowers who overcame a financial hardship that was out of their control and improved their credit profile and are shopping for a mortgage should consider smaller lenders. Valley National Bank and Fremont Bank, which is based in the San Francisco Bay area, say they are open to working with some private jumbo applicants in as little as 2½ to three years, respectively, after the date of foreclosure.

More issues to consider in seeking a mortgage:

Cash reserves. The banks willing to work with these borrowers require large down payments, ranging from at least 25% to 50%, and savings that equal at least three months of mortgage payments.
Detailed screening. Lenders will often require a lengthy conversation with applicants to figure out the circumstances that led to their foreclosure.
Higher interest rates. Some lenders say if they do approve these applicants, they are likely to charge higher interest rates to compensate for the extra risk they are taking on.

To view the online article, please click here.

Dealing With Chicago’s Vacant Buildings Is Not an Open-and-Shut Matter

Posted on September 13, 2018October 29, 2018 by Safeguard

On October 8, the Chicago Tribune published an article titled Dealing with Chicago’s Vacant Buildings Isn’t an Open-and-Shut Matter.

Dealing with Chicago’s vacant buildings isn’t an open-and-shut matter
Problems in West Humboldt Park illustrate how daunting the epidemic has become

Dorothy Leonard has lived for 33 years in the same house on the same block in West Humboldt Park, one of the better blocks in the struggling West Side Chicago neighborhood.

She’s the block’s unofficial ambassador, shooing away young people who gather on the corner, telling neighbors where to go for help and calling the city when she sees a burned-out street lamp or plywood removed from a window at one of the boarded-up homes.

Two years ago, her neighborhood was chosen for renewal and reinvestment by the city and nonprofit community groups. Additionally, Chicago beefed up an ordinance to crack down on the city’s estimated 18,000 abandoned properties and those owners and mortgage servicers who fail to register buildings.

There was a belief that, despite the problems, areas such as West Humboldt Park could be nurtured back to health. The real estate market’s recovery has added to expectations that Chicago might see its vacant building problems alleviated.

Yet vacant, unsecured buildings still litter the neighborhood, providing havens for squatters and illegal activity such as arson, drug dealing and prostitution. Many buildings haven’t been registered, so the city is not collecting the fees and officials don’t know who to notify in case the property isn’t maintained, is broken into or is damaged. On Leonard’s block, only one vacant building has been registered.

Has there been progress?

“It’s really kind of hard to tell,” Leonard said.

The city’s worst problems are in the already battle-scarred West and South sides, but even neighborhoods like Belmont-Cragin, where there are vacancies but not many board-ups, find themselves struggling to see signs of accountability.

Today, only 5,158 vacant buildings are registered in the city, less than one-third of the estimated total that are vacant. And even registered buildings often aren’t in full compliance with requirements.

For example, the one registered board-up on Leonard’s block doesn’t have a sign out front showing who is responsible for it.

With little discernible progress being made, the city wants to hold owners and mortgage servicers of vacant buildings even more accountable for the eyesores that pepper its blocks. But the ordinance won’t apply to buildings in foreclosure with mortgages backed by Fannie Mae or Freddie Mac, after the city lost a federal court challenge to the ordinance.

Meanwhile, crime is festering as more buildings become vacant. Last year, more than 2,600 crimes were reported in Chicago’s abandoned buildings and vacant lots, up 48 percent since 2005, according to a study by Lawyers’ Committee for Better Housing. That equates to an average of seven crimes a day.

The battle to grapple with the issue is evident in West Humboldt Park. Although riddled with foreclosures, the neighborhood was thought to be attractive to first-time homebuyers and residential investors because of its access to parks and public transportation. The median price of a single-family home in August was $66,750, compared with $175,000 for the city as a whole.

One of the original nine areas picked for the city’s “micro-market recovery pilot program,” its 32 blocks are roughly bordered by Central Park Avenue on the west, Franklin Boulevard on the south, Kedzie Avenue on the east and, on the north, Augusta Boulevard from Central Park to Homan Avenue, and Chicago Avenue from Homan to Kedzie.

At the time the program was announced, Neighborhood Housing Services of Chicago Inc., a nonprofit, counted 115 vacant single-family and multifamily homes within those 32 blocks, and traced ownership of 40 percent of them to investors.

Two years later, 38 of those 115 properties are vacant and boarded. Sixteen have been demolished. Sixty-one have been identified as occupied.

Meanwhile, an additional 35 homes are newly vacant.

“It’s two steps forward and one step back, and that would be a good day,” said Ed Jacob, Neighborhood Housing Services’ executive director. “The rougher days would be when it’s two steps forward and two steps back.”

From 2000 to 2010, Humboldt Park’s population fell by 14.4 percent, according to census data. As residents moved out, thieves have moved in, stealing furnaces, copper pipe, even the address numbers. Some buildings have been damaged so severely that they have been marked with a big red “x,” a sign the Chicago Fire Department uses to warn first responders the buildings could be hazardous.

Many of the neighborhood’s vacant graystones and brick two-flats are in various states of disrepair. Plywood covers the front windows of some, but side windows are smashed and wide open. Others aren’t secured at all. Young men routinely congregate on the front steps of empty buildings. On a recent day, two men sat by a card table on a vacant home’s front porch.

The city envisioned West Humboldt Park attracting investors, and that has happened. But not all building purchases are positive.

Some buyers are speculators who apparently plan to hold on to properties until they can flip them at a profit or when the housing market fully recovers. In the Neighborhood Housing Services’ fall 2012 update of its 2011 building survey, 20 investor-owned buildings, most which were bought from 2009 through 2011, remained vacant. Two others had been demolished.

“I’m calling them buy-and-board investors,” said John Groene, neighborhood director of Neighborhood Housing Services’ office in West Humboldt Park.. “They bought it, but it’s been a year and it’s still sitting boarded.”

Trying to locate people responsible for such buildings is difficult, if not impossible. Groene said that even when he combs through public real estate records, it’s not unusual for buildings to be owned by limited liability corporations without individuals listed.

“You never know who it is,” he said.

Buildings that have been abandoned by such owners pose their own problems. The court process by the city to take ownership of abandoned buildings takes at least a year.

Still, here and there are small, but welcome, signs of progress, such as two construction workers carrying drywall and tool buckets into a brick two-flat on a recent morning.

There also are some success stories generated by the work of city and community groups to boost the number of owner-occupants. A case in point is a former renter that Neighborhood Housing Services staffers met while canvassing the area with a camera. The staffers helped negotiate a purchase-rehab loan so she could buy her own home in the neighborhood and move out of her apartment in a foreclosed building.

“Every time we save a building and help someone buy it and rehab it, it’s sending a message to people that already own their home that ‘My home is worth something. I’m staying,'” Groene said. “That helps keep your spirits up.”

Just identifying vacant buildings isn’t easy, which is why the city wants to add even more teeth to its registration law so officials know more quickly which ones have been abandoned.

“It’s a moving target a lot of times,” said Michael Merchant, the city’s building commissioner. “We’re always going to be chasing the vacant buildings.”

The city’s building department has 27 inspectors. So it also relies on police and community residents to help identify problem buildings, Merchant said. “We’re looking for the ones that are dangerous, providing havens for crime,” he said.

“If there was no regulation here, the situation would be worse,” Merchant said. “If you’re a bad actor, we’re going to get to you at some point.”

One of West Humboldt Park’s more troubled stretches is North St. Louis Avenue, blocks rife with vacant and abandoned buildings, some with their front doors ajar. On the 900 block alone, from Aug. 4 to Sept. 16, there were 11 crime reports filed with the city. They included heroin possession, theft, burglary, battery and criminal damage to property, according to city data.

Those homes are only one street from Leonard’s block, considered one of the 15 stronger blocks in the area that is more likely to attract first-time homebuyers. But convincing a homeowner who has purchase options elsewhere can be a challenge.

Take Ceil Sykes. The armed services veteran and mother of a 19-year-old college student has lived her whole life on the West Side.

Now renting half of a two-flat in the Austin neighborhood, Sykes is hoping to take advantage of the financial incentives available, like down payment assistance and subsidized purchase-rehab loans, to consumers like herself who are willing to bear the risks involved in buying and rehabbing a vacant home in a challenged neighborhood.

“There’s just so many vacant buildings, so many,” Sykes said as she rifled through a stack of papers that included the address of various vacant buildings she has looked at, if only from the sidewalk. “I know the people want better. I’m just hoping that the area, in the next eight to 10 years, has stood the test of time.”

She has looked at 30 buildings in West Humboldt Park and East Garfield Park, drawn to the neighborhoods by their proximity to the Garfield Park Conservatory, parks and public transportation options.

But it has not been an easy search. Address numbers are pried off homes, and with no contact information on them, she doesn’t know who to call to inquire about them. She doesn’t bother with houses where locks are broken, because that indicates they’ve been vandalized.

“They’re just devastated,” she said. “The walls are torn out for the copper pipes, so you have water damage. I’ve seen animals. It’s just amazing. There has to be something that tells me this is a house that can be recovered.”

One of her favorites is a brick two-flat with open front porches on North Central Park Avenue. It has been vacant for at least three years and is scheduled to go to foreclosure auction this year. It was registered as vacant in January 2012, more than a year after the city began receiving 311 calls about problems at the building.

The southern “gateway” to the neighborhood is the 500 block of North Central Park, and it exemplifies the uphill battle the neighborhood’s recovery faces. Neighborhood Housing Services has been named the receiver of four abandoned buildings in a row. They are kept secure, minimal repairs have been made to keep the exteriors safe, and the plywood on the windows has been painted a uniform shade of gray.

The receivership process has taken more than a year, and Neighborhood Housing Services knows it will be unlikely to attract a first-time homeowner to the properties, since there are several vacant buildings in a row. A few of the properties are likely to become affordable rental housing for veterans.

Miguel Nogueras grew up in Humboldt Park, lives in West Humboldt Park and works in the area as an agent for Zip Realty Inc. He sees the area slowly improving, but he said he has seen homebuyers beat out by investors’ cash offers, investors who rehab the properties and turn them into rentals, and others who board them up and wait to flip them. Those investors worry him.

“If you’re going to buy something, rehab it, rent it out, but don’t leave it in the condition it’s in,” Nogueras said. “To leave a property abandoned creates disinvestment in a neighborhood. It increases crime, it erodes the tax base.

“It’s a complicated issue. It’s a free society. People have a right to purchase a property and do what they want to do, but we don’t live on an island. We live in a community, and people need to think about that.”

To view the online article, please click here.

Calpers Concerned About Richmond, CA Mortgage Plan

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

On September 30, Reuters published an article titled Calpers Concerned About Richmond, California’s Mortgage Plan.

Calpers concerned about Richmond, California’s mortgage plan

(Reuters) – As Richmond, California, moves forward with a plan to help struggling homeowners by using its power of eminent domain to seize underwater mortgages, the list of those concerned about it is growing – and now includes the pension fund for many of the very same city workers pushing the plan.

The $268 billion California Public Employees’ Retirement System, the nation’s largest public pension fund, joins banks and other investors in worrying that Richmond’s plan will undermine the value of its holdings.

Calpers holds about $11 billion in income-producing mortgage-backed securities, though it calculates it has just $27,000 in exposure to mortgages targeted by Richmond.

“We are sympathetic to homeowners but as fiduciaries our focus must be in the best interests of our members,” Calpers spokesman Joe DeAnda told Reuters in the fund’s first public statement on Richmond’s plan. “We are watching the issue closely and have some concerns about the precedent this may set and the impact to investors.”

Meanwhile, the Service Employees International Union, which represents 452 of Richmond’s roughly 900 employees, most of whom are members of Calpers, is a full-throated backer of the first-of-its-kind eminent domain plan.

SEIU President Mary Kay Henry said in a statement that the plan is an overdue measure to prevent more foreclosures: “Tired of waiting on the banks and regulators, community groups and labor unions, including SEIU members, are taking action to find solutions locally.”

The opposing stance of two organizations charged with protecting the financial interests of the same group of employees shows some of the complexities that have made it difficult to remedy ongoing problems created by the 2007 housing bust.

The SEIU considers the fears of institutional investors over the possible impact to their holds such as Calpers to be unfounded scare tactics. It is more concerned with helping families struggling with their mortgage payments.

Located east of San Francisco and home to an oil refinery, Richmond is a world away from the towns on the other side of the San Francisco Bay that are populated by the Silicon Valley elite.

Under the plan, Richmond would buy up underwater mortgages for 80 percent of the homes’ current appraised value. The plan contemplates writing down the debt and letting homeowners refinance.

Supporters say the plan would help avert foreclosures and make mortgages more affordable in a city plagued by a high percentage of underwater loans — a situation in which the balance owed on a mortgage exceeds the value of the property itself. Fully half of Richmond’s mortgage borrowers are underwater.

“If the program succeeds it will help homeowners get principal reduction, which will help people stay in their homes and some day own their homes,” said Doris Ducre, a 60-year-old lab technician. She said her four-bedroom home in Richmond was last appraised at less than $200,000, well below the roughly $400,000 she owes on it.

LOBBYING CALPERS

George Linn, spokesman for the Retired Public Employees’ Association of California, a group of retirees and active employees of Calpers, sympathizes with borrowers like Ducre, but he sees the plan as a risk for any investor in mortgage-backed securities. He intends to press that point at the next meeting of Calpers’ investment committee.

“This may have far-reaching effects,” he said. “It’s not just in Richmond that people find themselves under water with their mortgages.”

Richmond could use eminent domain, a power typically used to seize property for public purposes such as building roads, to acquire mortgages if the investors holding the mortgages turn down offers to buy homes at deep discount to the value of the loans.

Richmond has already made offers for 624 delinquent and performing mortgages, spurring critics to say it is lending its eminent domain power to Mortgage Resolution Partners, the investor group that pitched the plan to Richmond and could split profits from refinancings with the city.

The financial debate swirling around the plan doesn’t matter to Millie Cleveland, an SEIU field representative for Richmond who shares Mayor Gayle McLaughlin’s view of the plan. “Now we have the political will to take on the banks,” she said.

Banks — Wells Fargo & Co, Deutsche Bank AG, Bank of New York Mellon — are contesting Richmond’s plan, but as trustees for others with stakes in mortgages in the city. And like Calpers, those bondholders — which include BlackRock Inc, DoubleLine Capital LP, Pacific Investment Management Co, Fannie Mae and Freddie Mac – are concerned Richmond may prove a precedent.

“The fear is that it’ll open a floodgate,” said Vince Fiorillo, president of the board the Association of Mortgage Investors and global sales director at DoubleLine Capital.

Richmond’s city council voted 4-3 to advance the plan earlier this month, but it would need a fifth vote to actually begin seizing mortgages, and it’s not clear when such a vote might take place.

Wells and Deutsche Bank sued in federal court in San Francisco to halt the plan, but the suit was dismissed as premature. Bank of New York Mellon is pressing a separate suit against Richmond.

(Corrects headline, and 1st and 2nd paragraphs to show that Calpers is concerned over the plan, not that it says it is opposed to it)

To view the online article, please click here.

Bondholders Appeal CA Eminent Domain Case Dismissal

Posted on September 13, 2018October 4, 2018 by Safeguard

On October 17, National Mortgage News published an article titled Bondholders Appeal California Eminent-Domain Case Dismissal.

Bondholders Appeal California Eminent-Domain Case Dismissal

Bondholders of mortgage loans that Richmond, Calif., has threatened to seize through eminent domain are asking a federal appeals court to revive their lawsuit against the city.

Bank trustees for investors including BlackRock Inc., Pacific Investment Management Co. and DoubleLine Capital LP are appealing U.S. District Judge Charles Breyer’s Sept. 16 ruling tossing the case, Rocky Tsai, an attorney for the banks, said in a filing today in federal court in San Francisco. They’re asking a federal appeals court in San Francisco to review the ruling, according to the filing.

Breyer ruled that the lawsuit had to be dismissed because Richmond city council members hadn’t yet voted to proceed to state court and file an eminent domain case to seize the loans. The trustees’ claims depend on “future events that may never occur,” Breyer said in dismissing the case.

Bank trustees sued in August alleging constitutional violations in Richmond’s plan to use eminent domain to seize more than 600 loans on which the amount owed is more than the value of the property and refinance them to give homeowners built-in equity.

Richmond Mayor Gayle McLaughlin and lawyers for Mortgage Resolution Partners say the plan will prevent foreclosures and blight. Lawyers for the trustees allege that some of the targeted loans are still performing and the plan will harm investors and disrupt the U.S. housing market if it’s allowed to proceed and other communities follow suit.

Mortgage Resolution Partners LLC would provide financing for the plan. McLaughlin didn’t immediately return a call seeking comment.

To view the online article, please click here.

Zombie Property Ruling Could Hurt Evanston, IL

Posted on September 13, 2018October 29, 2018 by Safeguard

On September 18, Evanston Now published an article titled ‘Zombie’ Property Ruling Could Hurt Evanston.

‘Zombie’ property ruling could hurt Evanston

A recent federal court decision may undermine Evanston’s ability to keep vacant properties maintained.

The decision by U.S. District Court Judge Thomas Durkin said the City of Chicago cannot enforce its vacant buildings ordinance against mortgage lenders if the loans are backed by the federally-superivied entities Fannie Mae and Freddie Mac.

In 2011, the Federal Housing Finance Agency sued Chicago to prevent the city from enforcing the ordinance against lenders before the foreclosure process had been completed — arguing the city’s vacant property registration fee amounted to a tax on the federal government.

It’s estimated there are roughly 300,000 zombie properties nationwide and that the problem is especially severe in parts of Florida.

But what does this mean for Evanston, a city with its own vacant buildings ordinance?

The issue revolves around the existence of “zombie properties.” These are properties that have entered the foreclosure process and are under the control of the mortgage lender. But the lender has failed to take responsibility for the upkeep of the buildings.

“The goal of our program essentially is to make sure any vacant buildings in the city are properly maintained,” said Carl Caneva, assistant director of Evanston’s Health Department.

The first step in this process is to identify what buildings are vacant.

“Generally, once a bank takes [a property] over we have a pretty good record of where that vacant building is,” Caneva said. “They do register pretty quickly, and they are under obligation to register.”

Otherwise, the city is able to identify vacant buildings through the inspection process. Sometimes a resident will call to complain about an untended lawn, for instance, and city inspectors will then respond. If a building is found within violation of a city code, a notice is sent out including a timeframe in which the violation(s) must be addressed.

If no response is received, “we start to do research on the property,” Caneva said, adding that the city doesn’t want to simply issue fines against an unoccupied building.

“In the case where the bank hasn’t come forward and we haven’t registered [the property], the program becomes difficult because it is in a limbo status,” he said. “Somebody walked away and the bank has not picked it up yet. So really there is no one who is going to take responsibility for it.”

In that instance, the city may hire a contractor to correct the issue. If that happens, a lien is issued against the property, which the lender will then have to take responsibility for once they claim ownership of the building.

When the lender assumes ownership, they are required to register the building, which includes a $400 annual fee. They must also submit a plan as to how the building will be cared for in the future. The building is then inspected by a city, which costs $500, and the lender is then informed of all liens and violations at the property.

After those steps are completed, “we still do a monthly check up to make sure it’s being kept up,” Caneva said.

Currently the city has 153 registered vacant properties, Caneva said. That’s about half of one percent of all the housing units in the city. Since the program begain in 2009, a total of 169 properties have been registered at one time or another.

As for who pays for correcting the violations and the lien, if the property has one, that’s up to the bank and the prospective buyer, Caneva said. However, he said the property cannot be occupied until all violations have been resolved.

Has Evanston had any issues getting lenders to register these buildings with the city?

“From the time I’ve been involved with program, about a year, I haven’t seen many instances where that has taken place,” Caneva said.

“One or two times we have had to call the bank and tell them this is problem,” he said. But once a property is registered, an agent of the bank is assigned to the property and all dealings with the city are conducted through them. Caneva said the city hasn’t had many issues with these agents not complying with the ordinance.

But what about the ruling against Chicago? Does Evanston plan to change its ordinance in response to that?

“As of right now that does not affect how we act or how our ordinance is in effect,” Caneva said. “We are a home rule city and we have our own ordinances.”

To view the online article, please click here.

Richmond, CA Moves Forward With Eminent Domain Plan

Posted on September 13, 2018October 4, 2018 by Safeguard

On September 11, MortgageOrb.com published an article titled Richmond Moves Forward With Eminent Domain Plan.

Richmond Moves Forward With Eminent Domain Plan

Richmond, Calif.’s controversial plan to use eminent domain to seize underwater mortgages in an effort to help homeowners avoid foreclosure took a giant leap forward on Wednesday when the city council voted 4-3 in favor of moving forward with the proposal.

The city will now work with Mortgage Resolution Partners (MRP) to create a detailed plan that will be developed in conjunction with public officials, according to a Reuters report.

The concept involves a local government purchasing underwater mortgages secured by properties within its borders, restructuring them to reflect actual property values and then reselling them on the secondary market. In the event servicers and investors are unwilling to participate, then the municipality would seize the loans (with compensation to the owners) using eminent domain.

In Richmond, officials plan to invoke eminent domain should investors or trusts decline to purchase refinanced mortgages for more than 620 delinquent and performing “underwater” properties.

MRP has brought similar plans before other local governments – most recently in North Las Vegas, Nev., and earlier this year in San Bernardino County in Southern California – however most of those municipalities, including North Las Vegas, have since decided not to move forward with the proposals.

In August, the Federal Housing Finance Agency (FHFA) issued a statement vowing to fight local, county and state eminent domain proceedings in court and threatening to cut off involved municipalities from access to Fannie and Freddie loans should they choose to pursue the eminent domain option.

As the conservator of Freddie Mac and Fannie Mae, as well as the Federal Home Loan Banks, the FHFA is concerned that widespread seizures of the loans and their subsequent refinancing would diminish asset values.

In a recent memorandum, the FHFA says it “continues to have serious concerns on the use of eminent domain to restructure existing financial contracts and has determined such use presents a clear threat to the safe-and-sound operations of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.”

In addition to the FHFA, the Department of Housing and Urban Development, and other federal agencies, Richmond could also face a backlash from financial institutions as a result of adopting the proposal. According to the Reuters report, the city had no takers last month when the successor to its redevelopment agency put $34 million of bonds up for sale to refinance previous debt.

Investors holding the mortgages targeted by Richmond are reportedly suing the city through trustees Wells Fargo & Co. and Deutsche Bank AG in U.S. District Court. They hope to block the plan, which they say relies on them to absorb the losses.

Meanwhile, Rep. John Campbell, R-Calif., recently reintroduced the Defending American Taxpayers From Abusive Government Takings Act, which was originally introduced in September 2012. The bill would, in effect, preclude cities and towns from using eminent domain as a tool for keeping homeowners out of foreclosure. Chicago, Stockton, Calif., and Brockton, Mass., are other cities that have proposed such laws.

The proposed bill would amend the Federal National Mortgage Association Act and the Federal Home Loan Mortgage Corporation Act to prohibit Fannie Mae and Freddie Mac from purchasing any mortgage secured by eminent domain within the preceding 120 months. In addition, it would amend the National Housing Act to prohibit the Secretary of the Department of Housing and Urban Development from insuring or guaranteeing any loans in counties where such eminent domain laws are in effect.

To view the online article, please click here.