‘Zombie Home’ Amendment Scares Indy Officials
Updated 5/14: A recently published article by WTTV CBS 4Indy discussed Indiana SB 415, which was signed by Governor Mike Pence on May 6.
On April 17, the Indianapolis Star released an article discussing Indiana SB 415, which is currently under consideration in the Indiana State Legislature.
‘Zombie home’ amendment scares Indy officials
A measure moving through the Indiana General Assembly was billed as an effort to give cities more tools to fight blight and crack down on abandoned homes that destabilize neighborhoods.
But one of the bill’s former sponsors said a recent amendment would do the exact opposite.
At issue are so-called “zombie homes” — properties stuck in a sort of limbo where the owners have abandoned their home amid a foreclosure, but continue to own the title for years with no one taking care of it.
In the wake of the housing crisis, state and local governments around the country have created foreclosure registries that force banks to maintain them in the meantime. Such mechanisms haven’t made their way to Indiana yet — but some local officials fear that an amendment approved by the House Local Government Committee would pre-empt cities from trying.
“We think that they’re trying to prevent a registry,” said City-County Councilman Jeff Miller, a Republican from Indianapolis. “What we need is to be able to say ‘go fix the grass, go mow the lawn.’ “
Unlike their undead namesake, the problem of zombie homes is very real.
According to RealtyTrac, a housing data analyst, zombie foreclosures are down 6 percent from last year, but still represent 25 percent of all active foreclosures. Indiana had 5,217 zombie homes at the end of January — the seventh most in the country.
“When they’re stuck in the foreclosure process, there’s not really a clear person who’s responsible for it,” said Rep. Justin Moed, D-Indianapolis, one of the bill’s original co-sponsors. “They kind of just sit there. Neighbors, community groups and cities don’t know what to do.”
Abandoned, unkempt properties can drive down home values and become a magnet for crime.
When contacted about the amendment by The Indianapolis Star, the sponsor of Senate Bill 415, state Sen. Jim Merritt, R-Indianapolis, said he never intended to block cities from cracking down on zombie properties, and promised to address the concerns.
The measure already passed the Senate unanimously without the zombie language. But rather than send the bill to conference committee, Merritt plans to agree to the House changes, which include an amendment protecting mortgage settlement conferences. He said it would be easier to add the clarifying language in another bank-related bill this session.
“We will find a bill to establish in the law to make sure that the city of Indianapolis can have a zombie registry if that’s what they desire,” Merritt said — a promise that has reassured Councilman Miller, at least.
Moed said he would wait to see the language to comment on the proposed fix. He and Rep. Dan Forestal, D-Indianapolis, withdrew their support for the bill when the amendment went through.
“For me, it’s a tough pill to swallow to tell cities and communities that we’re going to protect the banks from cities holding them responsible for these properties,” Moed said. “That’s a big policy change.”
Meanwhile, city officials said they hadn’t planned to pick a fight over zombie properties this year. Their priority for this session was making sure that the main thrust of SB 415 went into law. It would close a loophole that prevented Indianapolis from using certain anti-blight measures, and enact additional reforms to a convoluted tax sale system that’s riddled with red tape.
“There are certainly foreclosure issues that still hurt our neighborhoods, but it’s not the volume that we saw four or five years ago,” said Jeff Roeder, deputy director of the Indianapolis Department of Metropolitan Development.
In other states, banks have pushed back against zombie registries, questioning why they should have to maintain properties they don’t technically own. Chicago’s rules were particularly aggressive, requiring maintenance levels above and beyond a typical landowner’s responsibilities. They were later watered down in response to bank complaints.
Miller said he understands the concerns, but insists they could be addressed in a way that doesn’t totally handcuff the city.
“If that’s your concern, tell us what you don’t want us to do,” Miller said. “Use a scalpel instead of a bazooka.”
Please click here to view the article online.
Please click here to view more information on Indiana SB 415.
Please click here to view House Amendment #2 [pdf].
Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow. Website: www.safeguardproperties.com.