Vacant Property Ordinances: Finding Common Ground on a National Scale
Published in Managing REO June 11, 2008
By Robert Klein
In addressing issues related to vacant property ordinances, mortgage servicers and municipalities have the same goal – compliance.
Municipalities want the parties responsible for vacant properties to take care of them so they don’t contribute to neighborhood blight – and mortgage servicers want the properties they are responsible for to comply with city ordinances.
As many in the industry have noted in the pages of this publication and in numerous industry forums, the challenge is finding ways to comply with rules that are often disparate, unwieldy, and in conflict with other laws, ordinances and guidelines.
Some have suggested that the solution is for servicers individually to reach out to municipalities one by one to discuss the challenges servicers face in complying with each community’s ordinances.
Reaching out and opening channels of communications between municipalities and servicers is always important to build and maintain strong relationships between our industry and the communities. However, the issue of vacant property ordinances requires that the servicing industry first work collectively to develop a unified voice and common platform so we can speak as one to address issues with municipal leaders on a national scale.
Without that unified voice, our outreach efforts will be as disparate and unwieldy as the vacant property ordinances that challenge us today.
This is why mortgage servicers and field servicers, under the umbrella of the Mortgage Bankers Association, have convened a Vacant Property Registration working group which has held a series of industry calls to unify our message and open dialogue with cities on a national scale.
It is important to keep in mind that municipalities are free to enact whatever ordinances they choose to protect their communities from the blight, crime and safety issues associated with vacant and abandoned properties.
As an industry, it is our job to demonstrate to communities that it is in their best interest to work collaboratively with the mortgage servicers and the field servicing industry. Municipalities have to see us as credible partners who can help them develop ordinances that are workable from our industry perspective, and that provide cities with the legal recourse they need when property owners and others fail in their responsibility to maintain properties to community standards.
As a first step, a listing of vacant property ordinances was compiled, including the location, date of enactment, a link to the full ordinance, and a summary of key issues around the ordinance. This list is available to the industry at http://www.safeguardproperties.com/pub/vacant_registration.pdf.
As new ordinances are identified and evaluated, the list will be updated. The purpose in evaluating these ordinances is to identify best practices, as well as those provisions that will be difficult or impossible to comply with for legal, safety, cost, logistical or other reasons. With this information, the MBA-led working group is developing best-practice recommendations for municipalities to consider as they create ordinances for their own communities.
The plan is to make these recommendations widely available through as many national forums as possible where city officials gather. The group also is identifying key cities where ordinances are under consideration and organizing a proactive outreach strategy to offer our help to create effective vacant property ordinances.
In this effort, it is essential that city officials realize that our opposition to provisions in their ordinances is not self-serving. In fact, we have learned that cities often are not aware of the potential implications, legal conflicts, or negative consequences that could result when they enacted certain ordinances and provisions. By helping them understand the challenges and practical realities of servicing vacant and abandoned properties, based on what we experience in the field, we can reinforce to municipalities that we share a common interest in preserving and maintaining these properties.
Among the issues that the working group will propose to municipalities will be:
- Standardizing definitions of pre-sale, vacant but not abandoned, and vacant and abandoned properties.
- Recommendations for registering properties known to be vacant and abandoned.
- Notifications to servicers of demolition orders and other legal actions based on those registrations.
- Practices around securing properties and addressing hazardous conditions in both pre-sale and post-sale.
- Recommendations regarding post-sale obligations, including compliance standards, registration fees, for-sale listings and interior inspection standards.
By engaging in dialogue in a consistent and unified manner, the group’s hope is that municipalities will view servicers as partners when they create vacant property ordinances. As an industry, we can help cities identify more effective and creative strategies to assure that properties are inspected, maintained and secured, without causing secondary problems that some ordinances have the potential to create.
We also demonstrate our commitment and credibility as responsible partners by sharing information about initiatives we’ve already taken as an industry to respond quickly to code violations. Many cities still are not aware that contact information for all major mortgage servicers is posted on the Mortgage Bankers Association website (www.mbaa.org) in the Property Preservation Resource Center. This information is available to every code enforcer in the country, and has been invaluable in reducing the number of code violations and lag time in addressing them.
The more professional, proactive and unified we are as an industry, the better our opportunities will be to participate in the decision-making process with municipalities throughout the country as they make decisions that affect our industry.