San Diego Foreclosure Measure Impact Unclear
On November 11, the Voice of San Diego published an article titled Impact of Alvarez’s Signature Foreclosure Measure Unclear.
Impact of Alvarez’s Signature Foreclosure Measure Unclear
Councilman David Alvarez celebrated a legislative victory last November after months of pushing for a registry to force banks to take responsibility for foreclosed homes before they become run down and affect neighbors’ property values.
Alvarez and his supporters have repeatedly touted the measure, known as the Property Value Protection Ordinance, as he campaigns for mayor but nearly a year after it was approved, it’s still hard to tell whether it’s achieving some of its core goals.
The nearly year-old city law created a registry of foreclosed homes and contact information for banks to ensure the city can hold those who don’t maintain their properties responsible. Participants pay $76 annually to register and up to $5,000 in fees if they fail to do so.
The city has logged roughly 1,700 residential properties in its foreclosure database and collected more than $190,000 in associated fees. But a city code enforcement manager charged with overseeing the program couldn’t detail how it’s help the city crack down on problem properties, or even say whether it’s helped code officers reach the banks responsible for those homes more quickly than they would have without the measure.
“It gives us some leads on tracking people down that may be responsible for the property that we may not have had before but that would be the extent of how it’s helping us,” said acting Code Enforcement Coordinator Mike Richmond.
The limited resources applied to the program may be partly to blame. Nearly a year after program was implemented, the city has hired only one of the three workers a former code enforcement chief said would be necessary to run the program and code workers have only inspected a handful of properties in the registry.
Alvarez and Clare Crawford, president of the Center on Policy Initiatives, a left-leaning think tank that promoted the measure, argue its impact can’t be fully measured yet, or perhaps ever.
They say just requiring banks involved in the foreclosure process to pay a registration fee and share their contact information provides an incentive to take responsibility.
“If (banks) have registered, they know we’re going to hold them accountable,” Alvarez said. “It was a measure to let people know we know who you are and if you don’t maintain your property, (the city) is going to come after them.”
City staffers are set to provide a more extensive report on the program’s caseload, impact and budget before the city’s Land Use and Housing Committee in coming months. Alvarez said he looks forward to that review.
Basics of the Ordinance
Alvarez faced significant opposition from former Mayor Jerry Sanders, fellow City Council members and Realtors in his nearly two-year quest to create the foreclosure registry. It was eventually approved in a 5-3 City Council vote long after the height of the foreclosure crisis.
Neighboring cities, including Chula Vista, approved programs to combat foreclosure-related blight years ago.
Alvarez made compromises in an effort to ensure the measure’s central goal survived.
The final version of the ordinance required lenders to register with the city within 10 days of a notice of default, which is filed after a homeowner falls behind on mortgage payments.
Earlier drafts implied city code officers would regularly inspect those properties to stave off blight, a charge the city’s former code enforcement chief said would require the city to hire as many as 44 new workers.
The measure approved by the City Council simply empowered the city to inspect and monitor residences in the foreclosure database. At the time, the city projected it needed three new employees to work on the foreclosure registry.
Alvarez and city staffers projected the $76 registration fee and $100-a-day fines on lenders that fail to send proper documentation to the city within 10 days would cover the cost of the program.
Here’s an early look at whether that pledge, along with other goals of the ordinance, have been accomplished.
Goal 1: Create a registry of foreclosed properties and hire three people to oversee it.
In February, the city implemented the ordinance and began adding residences in the foreclosure process to a database.
The registry includes records of fees, contact information for lenders assigned to the properties and basic information about the residence.
City leaders only set aside cash for one new employee for the program.
In May, the city hired an administrative staffer to manage the database, monitor notices of default and other foreclosure-related filings in the city and send out registry notices.
A senior code enforcement worker was also initially assigned to help oversee the program but she’ll soon focus less on those duties, Richmond said.
He said the code enforcement division plans to request money next year to hire a full-time zoning investigator to monitor properties in the foreclosure registry and an administrative assistant who would spend about half of his or her time working on the database.
Goal 2: Ensure banks can’t escape responsibility for blighted properties.
Throughout the foreclosure crisis, the homes around foreclosed properties suffered too. Neighbors’ property values took a hit as weeds sprouted around foreclosed properties and uninvited visitors pounced. Meanwhile, cities sometimes struggled to determine who owned the property and to force banks to take responsibility.
Before the city created its foreclosure registry earlier this year, Richmond said code officers relied on several databases and outside services to track down property owners and lenders.
Richmond said the foreclosure registry has provided another resource for code enforcement officers but couldn’t detail any examples or say how often it’s helped.
Goal 3: Crack down on problem properties.
The ordinance opened the door for the city to penalize financial institutions for foreclosed properties that fall into blight but that hasn’t happened.
Increased enforcement would require more staffing, Richmond said.
Soon after the ordinance was first implemented in February, a code enforcement officer checked more than a dozen properties listed in the database but found no violations that required penalties. Code officers haven’t done random checks of such properties since.
It’s also not clear what fraction of other properties in the database might be considered truly problematic.
Richmond could only single out eight abandoned properties residents or police had complained about that also appear in the city’s foreclosure database. This is a tiny fraction of the more than 1,600 homes listed in a registry created to ensure accountability for problem properties.
This may be because the city requires lenders to sign onto the registry after they’ve filed a notice of default, an early step in the foreclosure process. After this happens, homeowners may catch up on their bills or come to new agreements with their lender and keep their houses.
Goal 4: The ordinance should pay for itself.
Moments before the City Council voted on Alvarez’s hard-fought measure, he repeatedly tried to drive home one point: It wouldn’t cost the city any money.
And it hasn’t.
As of mid-October, the city had collected $126,464 in registry fees and another $65,000 in penalties, according to code enforcement records.
That totals $191,464, nearly $108,000 more than the salary and benefits the program’s single administrative staffer is set to receive this year.
The city is also seeking another $890,000 in penalties that have yet to be paid.
Richmond said the registry fees are funneled directly to the city’s operating fund while the penalty fees go specifically toward code-enforcement efforts. The city has yet to use the latter cash for work associated with the Property Value Protection Ordinance.
To view the online article, please click here.
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.
