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OK HB 2620 Passes House, Heads to Senate

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

On March 4, NewsOK published an article titled Oklahoma House Approves Measure to Ban City Vacant Property Registries.

Following is the aforementioned article.

Oklahoma House approves measure to ban city vacant property registries

The Oklahoma House passed a bill Tuesday to ban city registries for vacant property. The bill, supported by Realtors, was drafted after Oklahoma City officials created a registry of vacant local properties.

In brief

House OKs

property bill

The Oklahoma House passed a bill Tuesday to ban city registries for vacant property. House Bill 2620, pushed by a coalition led by the Oklahoma Association of Realtors, came in response to the Oklahoma City Council’s approval of such a registry late last year and other cities interested in regulating such property.

Rep. Steve Martin, R-Bartlesville, is the author.

The bill passed 68-23 and now goes to the Senate.

Realtors also are supporting a related bill, House Bill 3363 by Rep. Jon Echols, R-Oklahoma City, said Matt Robison, vice president of government affairs for the Oklahoma Association of Realtors. Echols’ bill would “better define abandoned and neglected property,” Robison said.

Oklahoma City estimated that there are 12,000 vacant or abandoned buildings in the city, and relied on a study that cited rundown houses and commercial buildings as an across-the-board drag on property values. The Realtors and others objected to fees associated with administering the registry, among other things.

Please click here to view the online article.

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.

HUD: Vacant and Abandoned Properties: Turning Liabilities Into Assets

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

The Office of Policy Development and Research (PD&R), within the U.S. Department of Housing and Urban Development (HUD), released a policy update titled Vacant and Abandoned Properties: Turning Liabilities Into Assets.

Vacant and Abandoned Properties: Turning Liabilities Into Assets

Highlights

The absence of universal definitions of vacancy and abandonment complicates efforts to assess the number of vacant and abandoned properties nationally.
Vacant and abandoned properties are linked to increased rates of crime (particularly arson) and declining property values. The maintenance or demolition of vacant properties is a huge expense for many cities.
It is critical to match strategies for combating vacancy to neighborhood market conditions.

Derelict houses, dormant factories, moribund strip malls, and other types of vacant and abandoned properties are among the most visible outward signs of a community’s reversing fortunes. Properties that have turned from productive use to disuse are found in cities, suburbs, and rural areas throughout the country, and they vary widely in size, shape, and former use. But these vacant and abandoned properties are more than just a symptom of larger economic forces at work in the community; their association with crime, increased risk to health and welfare, plunging property values, and escalating municipal costs make them problems in and of themselves, contributing to overall community decline and disinvestment.1 Local government officials, community organizations, and residents, however, increasingly view vacant properties as opportunities for productive reuse, reimagining blight and dilapidation as urban farms, community gardens, and health facilities. To them, empty homes can become assets in neighborhood stabilization and revitalization that can be renovated and reoccupied.

Vacant and abandoned properties have long plagued the industrial cities of America’s Rust Belt, but the spike in foreclosures following the recent recession has compounded problems for these areas and has caused vacancy rates to surge nationwide, especially in recently booming Sun Belt states such as Florida, Arizona, and Nevada. These communities face mounting blight and physical deterioration of properties, declining tax revenues, and rising public costs. Although nationwide factors (in particular, the foreclosure crisis) helped create these vacancies, local factors — the condition of the properties, the health of the local housing market, and the strength of the regional economy — are what shape the range of options available for returning these properties to productive use. The approach taken to reclaim one vacant property among many in a distressed Detroit neighborhood, for example, will be different from that taken to reclaim a property in a rebounding Phoenix suburb — or, for that matter, in another Detroit neighborhood with a healthy housing market.

Local political and economic contexts, as well as limitations of capacity and resources, shape the tools that local governments, nonprofits, and neighbors employ to address and reuse vacant and abandoned properties. The most desired outcome is to quickly return a property to its previous use — an owner-occupied residence or a thriving business. However, tight credit, weak markets, population loss, or other factors may require other solutions such as demolition, conversion of owner- occupied housing to rental housing, or replacement (such as constructing a solar farm on a former industrial site). Strategies for reuse aim to stabilize and revitalize neighborhoods and may stimulate economic recovery and growth or, in the case of shrinking cities, manage decline in ways that improve quality of life for the remaining residents.

Defining the Problem

Properties may become vacant for a variety of reasons, some of which are relatively benign. A property that is for rent or sale can be vacant for a short time, and a vacation home might be vacant for most of the year. If these properties are well maintained by responsible owners, they will not become eyesores or depress neighboring property values. In general, a vacant property becomes a problem when the property owner abandons the basic responsibilities of ownership, such as routine maintenance or mortgage and property tax payments.2 Multiple variables can lead authorities to designate a property as either vacant or abandoned, including the physical condition of a structure, the amount of time that a property has been in that particular condition, and the relationship of the owner to the property. For example, in Baltimore, the city building code defines residences as vacant only if they are uninhabitable, not if they are merely unoccupied.3

The absence of universal definitions of vacancy and abandonment complicates efforts to assess the number of vacant and abandoned properties nationally. The best aggregate sources include the U.S. Census Bureau and the U.S. Postal Service, although these are not without limitations. Using these sources, the U.S. Government Accountability Office (GAO) reported in 2011 that vacant residential units, not including those used seasonally or by migrant workers, increased from 7 million in 2000 to 10 million in 2010.4 The Joint Center for Housing Studies of Harvard University reported that a subset of this category, homes vacant and not being marketed for sale or rent, reached a record high of 7.4 million in 2012, with increases concentrated in the high-foreclosure areas of the South and West.5 Although vacant homes can be found throughout the country, they tend to be concentrated; nearly 40 percent of the nation’s vacant homes are located in just 10 percent of all census tracts.6 More than half of the census tracts with vacancy rates of 20 percent or higher were in just 50 counties, most of them in metropolitan areas. Wayne County in Michigan and Cook County in Illinois, for example, each have more than 200 high-vacancy neighborhoods.7 In addition to the many vacant and abandoned residential properties across the nation, estimates place the number of brownfields — idle former industrial properties with real or perceived environmental contamination — at approximately a half-million.8

The current inventory of vacant properties results from two main causes: the foreclosure crisis as well as long-term urban decline, depopulation, and disinvestment. Many Rust Belt cities have seen substantial population loss since their twentieth-century peaks as residents left for suburbs or other regions. This decline in the number of households has created a tremendous gap between housing supply and demand. Not only does this mismatch leave many structures vacant, but it severely weakens local housing markets, limiting the potential of market-based solutions to vacancy.9 Jobs and retail likewise suburbanized in the latter half of the twentieth century, leaving behind former sites of industrial production and commercial activity. The shrinking population — and the typically lower incomes of those who remain — are often insufficient to support commercial revitalization.10 Former industrial centers such as Baltimore, Cleveland, Detroit, and Gary, Indiana are dotted with empty factories and have thousands of foreclosures and vacant residential properties. Sun Belt metropolitan areas that were booming just a decade ago now suffer from widespread foreclosures.11 Both residential and commercial foreclosures are at high risk of becoming vacant or abandoned.12 Former occupants are likely to vacate the property, and because the costs associated with the foreclosure process are high and the value of a given property is often very low, lenders or servicers may walk away.13 In Nevada, Arizona, Florida, and Georgia, all states with high foreclosure rates, nonseasonal vacancies increased by more than 85 percent between 2000 and 2010.14

Please click here to view the update in its entirety.

Coral Gables, FL Wants Banks to Take Care of Foreclosed Homes

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

On February 25, the Miami Herald published an article titled Coral Gables Wants Banks to Take Care of Foreclosed Homes.

Link to proposed ordinance. Following is the aforementioned article.

Coral Gables wants banks to take care of foreclosed homes

Coral Gables is stepping up its efforts to make sure banks maintain foreclosed homes.

City commissioners tentatively approved an ordinance Tuesday that increases the annual cost of keeping a property on the city’s registry of abandoned homes, allows police to issue trespassing warnings on those properties, and allows the city attorney and city manager to take legal action against the lenders.

Commissioners touted the move as a way to keep banks on track in dealing with abandoned properties and getting them back on the market so that property values don’t suffer.

“It sounds to me like another arrow in our quiver,” Mayor Jim Cason said. “We certainly don’t want to lose property values.”

The registration fee is going from $200 to $600 annually. According to the ordinance, this is to cover the city’s “additional costs in monitoring the property.” Registration will give police the ability to issue trespass warnings to squatters.

In cases where a home has been left to languish too long, City Manager Pat Salerno would be able to authorize City Attorney Craig Leen to seek an injunction or initiate foreclosure proceedings.

“This is not imposing a duty on the city to file action in every case,” Leen said. “It’s in appropriate cases.”

Commissioner Vince Lago said that, after speaking with residents, he thought the ordinance was necessary.

“This is a prevalent problem that’s not only affecting safety, but it’s also affecting property values,” he said. “I don’t think it’s too harsh. I think it’s right in line with what our residents deserve.”

According to a search on the website for real estate information company RealtyTrac, 94 homes in Coral Gables are listed as bank-owned.

Please click here to view the online article.

CO Foreclosure Bills HB14-1295, HB14-1312 Pass House

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

On March 25, Denver Business Journal posted a blog titled House Passes Foreclosure Bills to Help Colorado Homeowners.

Link to bill text – HB14-1295 and HB14-1312. Following is the aforementioned post.

House passes foreclosure bills to help Colorado homeowners

A pair of bills meant to help homeowners avoid foreclosure passed in the Colorado House Tuesday morning.

HB14-1295, sponsored by Rep. Beth McCann, D-Denver, prohibits so-called “dual tracking,” in which a lender negotiates with a borrower while simultaneously pursuing foreclosure.

The bill also requires a lender to establish a single point of contact for the borrower to communicate with the lender concerning foreclosure matters, ending the runaround reported by many homeowners involved in loan modifications.

It was sent to the Senate on a 38-27 vote, with Rep. Jared Wright, R-Fruita, joining the House Democrats in support of the bill.

During the debate, Rep. Spencer Swalm, R-Centennial, first railed against the $800 billion that the federal government spent bailing out Wall Street banks, but later said he liked the bill because he thinks it levels the playing field somewhat between banks and homeowners.

Rep. Amy Stephens, R-Monument, joined him in support of the bill, saying that while she is leery of too much government involvement in private transactions, she thinks HB 1312 can give people who have lost a job or lost a spouse the temporary stability of not losing their home as they figure out their immediate future.

HB14-1312, sponsored by Rep. Angela Williams, D-Denver, delays the sale of foreclosed properties and passed 46-19. It will now go on to the Senate.

The bill continues the state’s foreclosure deferment program, which is scheduled to sunset at the end of the fiscal year.

Under the program, county public trustees are required to delay the scheduled sale of a foreclosed property for up to 90 days for homeowners who meet specific eligibility requirements.

Please click here to view the online blog.

Cleveland Federal Reserve Estimates Impact of Fast-Tracking Foreclosures in OH, PA

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

On March 6, the Federal Reserve Bank of Cleveland published an economic commentary authored by Kyle Fee and Thomas J. Fitzpatrick IV, titled Estimating the Impact of Fast-Tracking Foreclosures in Ohio and Pennsylvania.

Estimating the Impact of Fast-Tracking Foreclosures in Ohio and Pennsylvania
Kyle Fee and Thomas J. Fitzpatrick IV

All the signs in the housing market seem to be pointing the right way, except the amount of time loans are spending in the foreclosure process. Foreclosure fast-tracks for vacant homes in foreclosure may help reverse that trend.

In recent months housing markets have shown real signs of life: home prices, home purchases, and housing starts are up, while foreclosure inventories, foreclosure starts, and loan delinquencies are down. But in states that handle foreclosure through the courts (rather than nonjudicial trustee’s sales), the lingering effects of the foreclosure crisis may be costing taxpayers money and dragging down the recovery. In those states, the amount of time loans are delinquent before they enter foreclosure and the amount of time loans spend in the foreclosure process are rising.

Anecdotally, many explanations have been offered as to why this is happening. Loan modification programs may explain some of the increase in duration, as lenders work with borrowers in an attempt to modify the loan while the borrowers are delinquent or in foreclosure instead of proceeding to judgment. State-specific requirements, such as the lender having to produce the original note and mortgage may delay or prevent some foreclosures on delinquent loans. Shrinking budgets may be making it difficult for the courts overseeing the cases or the sheriff’s offices overseeing the property auctions and deed transfers to process foreclosures in a timely way. Selective foreclosure, which avoids low-value properties, may also be a contributing factor, shifting the costs of those properties from the lender to communities and taxing districts.

These problems are intensified when a home that is in the judicial foreclosure process is vacant. States with judicial foreclosure have longer foreclosure timelines than nonjudicial states. When the home is vacant, the cost of the extended judicial foreclosure process has no corresponding benefit, generating deadweight losses.

Recently, some judicial foreclosure states have passed laws that attempt to “fast-track” foreclosures if the property has been abandoned by the homeowner, and others have begun considering similar fast-track laws. This Commentary explores the economic reasoning behind fast-tracking and estimates the size of the deadweight loss that could be eliminated by creating an effective foreclosure fast-track in Ohio and Pennsylvania, two states in the Federal Reserve Bank of Cleveland’s District.

The Judicial Foreclosure Process
Requiring that foreclosures be conducted through the courts is a policy decision that has passionate advocates on both sides of the issue. Those that do require it—judicial foreclosure states—have decided that certain safeguards are required before real property can be taken from an owner by a creditor because of a default on a secured loan or by a taxing authority for failure to pay property taxes. In these states creditors and taxing authorities must proceed through the courts, which make sure they have the right to foreclose and the borrower has no legal defenses to foreclosure.

Legislatures have decided that protecting the rights of property owners is worth the higher cost of judicial foreclosure relative to nonjudicial foreclosure. These costs may change depending on whether homes stay occupied or are vacated by the owners during the foreclosure process. When a home in foreclosure remains occupied, the costs may only include the lost value of the creditor or taxing authority’s capital investment in the property (which does not earn a return during the foreclosure process), the litigation costs of all parties to the foreclosure, and the court’s time. But when a residential property in foreclosure is vacant, this calculation may change.

When the foreclosure sits vacant, there are additional costs to the creditor or taxing authority due to the accelerated depreciation of unoccupied homes, which are less well maintained and more likely to be vandalized or, in some cases, stripped of metal to sell for scrap. There are additional costs to the community when unoccupied homes create health and safety hazards and cause surrounding homes to lose value. In states that allow deficiency judgments such as Ohio and Pennsylvania, there are potentially further costs to the vacated homeowners, who will be liable for the difference between the price the creditor or taxing authority eventually receives for the home and the unpaid loan amount. Finally, any loss in property values will hurt municipalities or school districts funded in whole or in part by taxes on the value of real property.

Who bears these costs, in the end, depends on whether the foreclosure is completed. When the foreclosure is abandoned, costs are imposed on the community and taxing districts. The abandoned property is not easily rehabilitated due to the lender’s lien on the property. When abandoned properties are taken through foreclosure and sold, these costs are born primarily by the lender through rehabilitation costs or lower sales prices.

Most importantly, there is no obvious beneficiary of these costs. Communities and taxing districts face the externalities associated with vacant property: lower surrounding home values, increased crime, and reduced property tax collections. Homeowners who leave properties vacant are essentially resigned to the fact that they cannot dispute the right of the creditor or taxing authority to take the home through the foreclosure process, and as such gain no benefit from its use. Lenders receive no benefit from the judicial foreclosure process above the benefits they would receive through a nonjudicial process.

These deadweight losses—costs without corresponding benefits—are what legislatures in judicial foreclosure states have attempted to address by creating foreclosure fast-tracks. At least five states have created foreclosure fast-tracks for private mortgage foreclosure on abandoned property since 2010.1 Ohio created a private mortgage foreclosure fast-track for tax-foreclosure in 2006,2 and the Ohio legislature is considering a pilot foreclosure fast-track for properties abandoned by the homeowner.1 But there has been no economic analysis to determine the potential impact of a well-designed foreclosure fast-track.

Assuming a Close-to-Ideal Foreclosure Fast-Track
We estimate the potential for savings that an efficient and effective foreclosure fast-track could provide in Ohio and Pennsylvania. The savings would come from shortening the amount of time that vacant properties spend in foreclosure and eliminating the deadweight losses lenders suffer. To estimate these savings, we need to know three things: how many foreclosures might be affected (the number of homes in foreclosure that sit vacant), the daily deadweight losses associated with these homes, and time that could be shaved by fast-tracking.

Unfortunately, there is no single database that has all this information, so constructing our estimate is a multi-step process. We start by making several assumptions. We assume that an ideal fast-track for private mortgage foreclosure would only apply to homes in foreclosure that owners have vacated, it would be used on 100 percent of those properties, and it would cut the total foreclosure time—specifically, from the time the foreclosure is filed with the court to the point where the lender takes ownership of the property—down to two months.

The validity of these assumptions depends entirely on how the law is written. Typically, foreclosure fast-track laws require more than simple vacancy in order to qualify for the fast-track, which protects against the fast-track being misused but may prevent all vacant foreclosures from being eligible for fast-tracking. In some cases, qualification is based on criteria that would correlate with a vacated home (shut-off utilities and housing code violations, for example), so generally there should be a high correlation between vacancy and fast-track qualification. Additionally, once a foreclosure judgment is issued, the fast-track would have to transfer the property to the lender directly, or an expedited foreclosure auction and deed transfer process would be required.

A 100 percent utilization rate of a foreclosure fast-track also depends on how efficiently the process is designed: the faster and easier it is to use, the more it will be used. It is worth noting that a common anecdotal complaint by creditors’ counsel is that recently-passed foreclosure fast-tracks are difficult to use.

Another practice that may prevent 100 percent utilization is strategic foreclosure. Strategic foreclosure refers to foreclosures that are started but never completed or foreclosures that are never started because the lender determines that the home has little value. They usually occur when the home sits vacant and depreciates to the point that it would cost more to foreclose upon and maintain than could be recovered by selling the property. There is some empirical evidence suggesting that this has occurred in very weak markets.4 And anecdotally, local governments and communities have reported an increase in foreclosures that start but are never completed. A foreclosure fast-track does not completely address strategic foreclosure. It may lower the cost of foreclosure for lenders, but if the property has an extremely low net present value, lowering the cost of foreclosure may still not be enough to make completing the foreclosure worthwhile. A fast-track law could be constructed with features that ensure foreclosures that have started are completed, but the response to that might be to not initiate foreclosure on low-value properties, in which case the problem will persist.

Finally, bringing the fastest foreclosures down to two months also seems possible. The quickest foreclosures in Ohio and Pennsylvania are completed typically in five to six months (figures 1 and 2). This is a measure of the time that loans spend in foreclosure before they enter the lender’s real estate owned portfolio or are sold. In the case of vacant foreclosures, a fast-track could move the process down to a single hearing, and if the homeowner does not respond to the foreclosure filing, the property could be directly transferred to the lender or move to an accelerated sale. This process would be similar to the fast-tracked property tax foreclosure framework currently used in Ohio.

Please click here to view the commentary in its entirety.

Cincinnati Requires All Banks to Register Foreclosed Property

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

On March 12, Cincinnati Business Courier published an article titled Cincinnati City Council Requires All Banks to Register Foreclosed Property.

Please click here to view the ordinance. Following is the aforementioned article.

Cincinnati City Council requires all banks to register foreclosed property

The Cincinnati City Council voted 8-0 on Wednesday to require banks that foreclose on properties within the city to register and maintain the properties or face fines.

“Too big to fail should not mean too big to mow the lawn, “said Councilman P.G. Sittenfeld, the ordinance’s sponsor.

The ordinance expands a pilot program in five high-foreclosure neighborhoods – Westwood, West Price Hill, East Price Hill, College Hill and Madisonville – to all 52 Cincinnati neighborhoods.

The program’s aim is to make sure foreclosed properties do not lose their value because of vandalism or neglect and that city property codes, such as prohibitions against tall grass and standing water, are followed. Properties are inspected by the city at the beginning and end of the foreclosure process and documented via photos.

Neighborhood leaders joined Sittenfeld at a City Hall news conference on Wednesday to say that the requirement had led to noticeable changes.

Ken Smith, the executive director of Price Hill Will, said a feature of the ordinance that is particularly effective is a requirement that lenders provide contact information of a “real, living person,” instead of a general 1-800 number when they want to file a complaint.

The program is self-sustaining through its registration and fine structure, a $500 initial registration fee and a $500 annual fee. The fee is reduced to $50 if the bank installs an alarm system.

Please click here to view the online article.

‘Blight to Bright’ in Colorado Springs

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

On February 25, FOX21News.com published an article titled Bringing condemned homes in Colorado Springs from ‘Blight to Bright.’

Bringing condemned homes in Colorado Springs from ‘Blight to Bright’

COLORADO SPRINGS, COLO. — Fighting neighborhood blight is a constant battle in cities all across the country. There are hundreds of condemned homes in Colorado Springs. Most of them can be found in older neighborhoods, including the west side and near downtown.

In some cases, these abandoned properties pose a risk to the surrounding neighborhood and end up on the city’s “dangerous building list”. But, despite penalties, tax liens and numerous attempts to contact the owners to clean up the problem, these homes continue to be an eyesore for years – even decades.

“A lot of times when a property is abandoned, it’s an out-of-state owner or it’s someone we cannot get a hold of,” said Tom Wasinger, Code Enforcement Supervisor for the City of Colorado Springs.

As a result, these vacant and dilapidated homes not only bring down property values, they often attract transients and criminal activity. “We’ve had issues with drugs and that type of thing going on,” said Wasinger.

Tax money is used to monitor these homes about once a month. Code enforcement officers try to keep weeds and trash under control and the doors and windows boarded up.

“I wish we could tear these types of houses down,” said Wasinger. “The problem is you get in to constitutional issues. This is someone’s private property and it’s their right to have it.”

Colorado Springs resident Curtis Olson has a different opinion. “I’m a big believer in property rights,” said Olson. “But, I think when the property rights of a condemned and dilapidated home trumps the property rights of a person who lives next door there’s a conversation that needs to be had there.”

Olson started Blight to Bright, a neighborhood initiative focused on blighted properties in Colorado Springs and El Paso County. His goal is to work with government leaders and property owners to develop a comprehensive plan to flush these homes out of the system. According to Olson, many owners are so underwater in fines they feel trapped and are often looking for a way out.

“It isn’t about kicking someone out of their house, because nobody lives in these houses,” said Olson. “This is about renovating neighborhoods.”

Other cities across the country have declared eminent domain and either demolished these types of properties or auctioned them off with the condition they be renovated or torn down within a certain time period.

Because the City of Colorado Springs has a limited budget, taking on that role is not an option, according to Code Enforcement officials.

“There can be asbestos and lead issues that can escalate the cost,” said Tom Wasinger. “It’s not feasible for the city to come in and do the tear down, because eventually we have to get our money back and the taxpayers’ money back.”

But, through Blight to Bright, an established fund with the Pikes Peak Community Foundation, owners of condemned properties can donate their homes, and in return, the organization will handle all legal matters, fines and penalties.

“There are many cities that have done a lot of great work,” said Curtis Olson. “We need to embrace some of their ideas and come up with a plan of action. We need to get moving on it now.”

Please click here to view the online article.

Some Oklahomans Support Bill to Ban Vacant Property Registries

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

On February 25, NewsOK.com published an article titled Oklahoma Realtors, Other Business Groups Support Bill Banning Cities from Registering Vacant Properties.

Link to OK HB 2620 Proposed Text and Summary. Following is the aforementioned article.

Oklahoma Realtors, other business groups support bill banning cities from registering vacant properties

Oklahoma House bill would reject municipal ordinances requiring registry of vacant properties.

Oklahoma City’s new ordinance creating a registry for vacant property — paid for by the property owners — was too much for state Realtors, who call it an attack on property rights.

The Oklahoma Association of Realtors is leading support for a House bill to kill it and others support the effort. The Realtors, the Oklahoma State Home Builders Association, Oklahoma Credit Union Association, Oklahoma Bankers Association and Oklahoma Farm Bureau have come out for House Bill 2620, sponsored by Rep. Steve Martin, R-Bartlesville.

The Oklahoma City Council unanimously approved registration and fees — the Realtors call them fines — in December. The responding bill, which passed a House committee on a 6-4 vote last week, would prohibit property registries, include Oklahoma City’s. The bill goes next to the House floor.

The city ordinance was “presented as an effort to address abandoned and neglected property,” but it “mandates excessive fees, public registration requirements and expensive government inspections for well-maintained yet vacant property,” said Matt Robison, vice president of government affairs for the Oklahoma Association of Realtors.

The Realtors said other cities also are considering registries. Discussion of such a registry in Enid — and a draft copy of an ordinance — caused alarm among Realtors.

“This (Oklahoma City) ordinance has now become a model for other municipalities,” Robison said. “In an effort to protect property rights and keep local governments from overreach for the purpose of generating revenue, this bill assures that municipalities cannot mandate such registries.”

Oklahoma City officials estimated some 12,000 vacant or abandoned buildings in the city.

“Property ownership records are already public. Such registries represent overbearing governmental intrusion and do not protect property rights. Private property remains of great value to Oklahomans,” Robison said.

An Oklahoma City study last year cited rundown houses and commercial buildings as an across-the-board drag on property values. But, Robison said, vacant does not mean dilapidated, and he questioned city officials who would presume a vacant property to be a nuisance.

“There are many reasons a property may be vacant: a death in the family; foreclosure proceedings; commercial property awaiting a desired client; or a sentimental family farmhouse on property where a new residence is built,” Robison said.

Joe Pryor, immediate past president of the Oklahoma Association of Realtors, said a registry will do nothing “to solve a complex problem.”

“It is, more than anything, a revenue producer that allows for sweeping powers over what is considered vacant but not abandoned or neglected,” said Pryor, an agent with Redbud Realty & Associates in Edmond. “No matter how well intended, here’s the bottom line of this ordinance. Under certain circumstances, if you don’t sell your home within 30 days of moving out, you will be fined $285 plus the potential of $190 per month thereafter.

“No worthwhile economist would say this is a good idea. We all understand the importance of dealing with dilapidated property. That’s why Oklahoma statutes already have laws on the books allowing municipalities to tear them down.”

Jennifer Blackwell, government affairs director for the Greater Tulsa Association of Realtors, said the Realtors’ lobbying is in response to the Oklahoma Municipal League, which “mounted a campaign which included a ‘Call For Action,’ direct lobbying and verbal testimony. Our (The Realtors’) response mirrored that effort, which resulted in this narrow victory.”

She said a House member reported “feeling the pressure” from the Municipal League.

“We expect this to remain a difficult challenge throughout session,” Blackwell said.

Please click here to view the online article.

NY Attorney General Schneiderman Proposes Legislation to Address Foreclosures

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

On February 10, Poughkeepsie Journal published an article titled Schneiderman Would Push Banks to Address Foreclosed Properties.

Schneiderman would push banks to address foreclosed properties

ALBANY — Banks would be forced to more quickly address the upkeep of homes in foreclosure in New York under a measure proposed Monday by Attorney General Eric Schneiderman.

The proposal, which would need legislative approval, would also double the number of land banks in New York, which provide funding for the remediation of abandoned homes, from 10 to 20.

“The fact is if you have an abandoned property, it brings down the property values of the entire neighborhood; they are havens for crime,” Schneiderman told reporters. “They hurt the whole community, not just the family that lost their home.”

Upstate cities have struggled with abandoned homes. Buffalo has about 7,000 vacant homes, and Rochester has roughly 2,200. In Newburgh, Orange County, 10 percent of its housing stock is vacant, about 600 homes in a four-square-mile area.

“The big issue really is that nobody seems to have any responsibility for them,” said Newburgh Mayor Judy Kennedy. “So then what happens is you have the squatters, you have the people who come and strip them out of copper — and it just breeds crime.”

Schneiderman said he will introduce legislation that would target so-called zombie properties – homes that are abandoned by their owners during the foreclosure process.

The Democratic attorney general said that homeowners too often leave their property before lenders officially foreclose — and then the properties are left in disrepair.

His proposal would require lenders to become responsible for delinquent properties soon after they are abandoned – not at the end of the foreclosure process, which can be lengthy. He said it would force lenders to more quickly foreclose on homes.

The measure would also create a statewide registry of “zombie” properties, allowing local governments to better identify properties that have been abandoned. New York has about 11,000 owner-vacated properties, about 14 percent of the roughly 76,000 foreclosed homes, according to RealtyTrac, a website that tracks foreclosures.

The bill would also require banks to provide written notice to homeowners who are three-months delinquent on their mortgages. The notice would aware them of the fact that they could still occupy the property until they voluntarily surrender the title or are ordered by a court to leave.

Schneiderman said some homeowners are not aware that they don’t have to immediately vacate their homes when the foreclosure process begins.

“This is something we can do that will lead the country,” he said of the proposal.

RealtyTrac estimated that the Rochester area had about 1,100 “zombie” properties, or 27 percent, of the region’s 4,100 foreclosed homes. The Poughkeepsie area had about 800 owner-vacated properties, about 20 percent of the region’s foreclosed properties, which includes Newburgh and Middletown, Orange County.

About 32 percent of the Binghamton area’s properties in foreclosure were “zombie” properties, or about 350 homes.

Mayors were supportive of Schneiderman’s initiative. It was unclear whether the Legislature would support it; the session runs until late June.

The state Bankers Association said it would review Schneiderman’s proposal.

“The New York Bankers Association has long-supported efforts to address the issue of vacant and abandoned properties,” the group’s president, Michael Smith, said in a statement. “We support a bill currently pending in the Legislature which would accelerate the conclusion of the foreclosure process for vacant and abandoned properties, thus greatly reducing the period of time in which a property can fall into disrepair.”

Yonkers Mayor Mike Spano said that abandoned properties hurt the whole city.

“As a city, to have these things lie vacant, they just become either fire traps or continue to be eyesores,” Spano said. “We are looking for help in any way we can.”

Ithaca Mayor Svante Myrick said the city has a different problem: it doesn’t have enough housing. He said the law would help them more quickly redevelop about a half dozen vacant homes and buildings in the city.

“We’ve got a different kind of housing crisis in Ithaca. Our housing crisis is that we can’t get enough housing built,” Myrick said.

Please click here to view the online article.

Lenders Initiating Foreclosure of Abandoned Properties in WI Need to Promptly Sell the Property

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

On February 5, ReinhartLaw.com published an article authored by Reinhart Boerner Van Deuren s.c. Attorneys at Law, titled When Lenders Initiate Foreclosure of Abandoned Properties in Wisconsin, They Need to Promptly Sell the Abandoned Property.

United States: When Lenders Initiate Foreclosure of Abandoned Properties in Wisconsin, They Need to Promptly Sell the Abandoned Property

After a recent decision by the Wisconsin Court of Appeals1, Wisconsin’s lending community should think twice before initiating a foreclosure action on an abandoned property. The court’s holding requires lenders holding a foreclosure judgment on abandoned property to sell the property five weeks after the foreclosure judgment is entered. Although this case dealt with only residential property, the Wisconsin Statutes the court relied upon do not differentiate between residential or commercial properties. Therefore, this interpretation is likely to have equal application to commercial properties as well.

The facts of the case involved a bank initiating a foreclosure action against its borrower, Ms. Carson, who the court described as a “sixty-two-year-old widow who was physically and financially unable to care for the property.” Ms. Carson did not answer or dispute foreclosure. Instead, she moved out.

Consequently, three months later, the bank went through the formal—and required— process of registering the house with the City of Milwaukee as an abandoned property. Pursuant to City of Milwaukee ordinances, lenders of abandoned properties have certain obligations to inspect abandoned properties that are subject to foreclosure actions. In June of 2011, the bank obtained a foreclosure judgment by default. Then, as far as the court discerned, the bank did nothing, including failing to comply with its inspection requirements under the City’s ordinances. Ms. Carson continued to have very little to do with the property as well.

Other people, namely burglars and vandals, visited the property more regularly than did either the bank or Ms. Carson. Thanks to their handiwork, the City of Milwaukee fined Ms. Carson, who remained the property owner, pending a sheriff’s sale. Finally, in November of 2012, 16 months after the foreclosure judgment, Ms. Carson filed an action to force the sale of her property. The bank objected, claiming she had no such right to determine when the bank had to sell the property.

Although the lower court sided with the bank, the appellate court overturned the decision, siding with Ms. Carson. The appellate court examined Wisconsin Statute Section 846.102 in detail. In relevant part, the statute reads that “[i]n an action for enforcement of a mortgage lien [of an abandoned property,] . . . the sale of such mortgaged premises shall be made upon the expiration of 5 weeks from the date when such judgment is entered.” The statute provides that ” [i]n addition to the parties to the action to enforce a mortgage lien,” a municipality or county may also enforce such lien rights.

Given the plain language of the statute, the appellate court held that a lender holding a foreclosure judgment against an abandoned property must sell the property five weeks after obtaining a foreclosure judgment. The appellate court further held that either party to a foreclosure action could enforce these rights. Many lenders may already abide by this nuanced obligation with respect to abandoned properties. However, all prudent lenders need to be aware of this recent decision and implement policies and practices to either delay receipt of a foreclosure judgment on an abandoned property or be prepared to move swiftly following such judgment.

The case may be appealed to the Wisconsin Supreme Court for additional review. Lenders should “stay tuned” for more information or clarification on this issue. Lenders should also be aware that this decision may not apply with equal weight to cases without very similar fact patterns. For example, it is unclear that the court would have come to the same decision if the bank obtained a foreclosure and then, only after the judgment, Ms. Carson abandoned the property.

If you have questions about foreclosure processes in Wisconsin generally, or about foreclosure of an abandoned property specifically, do not hesitate to contact the lawyers at Reinhart for assistance. Reinhart has the largest real estate department of any law firm in Wisconsin, including lawyers who specialize in foreclosure actions.

Footnote

1 Bank of New York v. Carson, 2013 WI App 153 (Dist. 1, Nov. 26, 2013).

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