Weight of Foreclosure and Ohio HB 223
On March 16, Akron Beacon Journal published an article titled Weight of Foreclosure.
Weight of foreclosure
Housing starts, home prices and purchases have been trending up, if somewhat fitfully, in Ohio. Foreclosure activity has declined. Still, new filings exceeded 70,000 in 2012, and the crisis continues to cast a long shadow, remaining a drag on the slow climb out of the housing debacle that triggered the 2007 recession.
A report released last week by the Federal Reserve Bank of Cleveland indicates the acuteness of the problem in Ohio and other states where foreclosures are handled through the courts. As the study notes, the amount of time it takes to complete the process — at least six months at its quickest in Ohio — adds significantly to the overall cost of foreclosures and slows the economic recovery. Vacant and abandoned properties present the highest expense.
It isn’t difficult to see why. Vacated houses deteriorate faster and reduce the value of surrounding properties. While they sit, they are of little benefit to mortgage lenders and do not generate revenue for local authorities, including school districts. Instead, they cost local governments money to protect against the properties becoming crime and health hazards.
By the study’s estimate, roughly 20 percent of Ohio’s foreclosed houses are vacant. Fast-track the judicial process for abandoned properties and clear other bottlenecks such as deed transfers, and the state would shorten the duration of foreclosures, reduce the inventory of foreclosed houses and substantially cut its losses. The report estimates the state could eliminate between $24 million and $129 million a year in losses.
One way to relieve the impact of the foreclosure crisis is to create an efficient process that moves abandoned properties more swiftly through the court system. House Bill 223, under consideration in the Ohio House, begins to push Ohio in that direction. Introduced last summer, the bill recently won approval in the House Financial Institutions, Housing and Urban Development Committee.
The bill takes reasonable steps to remove some of the barriers to quick resolution of foreclosure cases involving vacant and abandoned residential houses and unoccupied parcels designated as blighted. Among other provisions, it defines the criteria for declaring a residential property vacant and abandoned and thus eligible to be fast-tracked. It would permit a mortgage lender or a municipality to file summary action on vacant and abandoned residential houses, which would reduce the number of hearings.
The bill also would create a pilot program for foreclosing on blighted, unoccupied properties. One provision would eliminate the minimum-bid requirement if a property does not sell at first auction. At their convenience, municipalities would be permitted to dispose of any property that fails to sell at a sheriff’s auction. To prevent the trashing of houses, a homeowner who knowingly causes damage to a house in foreclosure would be guilty of vandalism.
Ohio is saddled with lingering costs and a backlog of foreclosure cases in the courts. House Bill 223 is a promising bipartisan effort to lift a weight that is slowing the economic recovery in communities across the state.
Please click here to view the online article.
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.