I’m just back from the SBOC conference in Lisle, IL and the OBOA and MVBOC joint conference in Dayton, Ohio. One of the things I especially enjoy, in addition to meeting new people, is getting new tips that I can pass on to other building officials and inspectors. For example, one of the attendees told me that he regularly attends sheriffs’ sales so that he can find out right away who bought the property. He may even be able to speak with someone on the spot. This way he doesn’t have to wait weeks until the deed is recorded at the Recorder of Deed’s office.
The Vacant Property Toolkit from the Business and Professional People for the Public Interest is finally ready and posted on its website at http://www.bpichicago.org/VacantPropertyResources.php I’ve written about this organization’s work in the past to address this very important issue and the Toolkit is a great starting point for any agency trying to deal with the problems presented by vacant and abandoned property.
I’m recently back from the Region III conference in Brooklyn Park, MN put on by AMBO. This year I stayed an extra night courtesy of Mother Nature (my Southwest flight was cancelled due to the snow storm in Chicago) but it gave me a chance to visit with a great group of people. One of the things that really impressed me is the difference between laws in a state like Minnesota versus those in my home state, Illinois. Inspectors in Minnesota have more tools at their disposal in dealing with the foreclosure crisis because of their ability to clean a property up and collect the costs on the property’s tax bill. In theory, Illinois inspectors can do the same thing but the way the 2005 law is written makes it so convoluted that I don’t know anyone who has been successful in collecting any money this way. Putting a lien on property isn’t sufficient. Years may pass before the property sells or the lien may be wiped out by foreclosure proceedings depending on local law. What is the difference between states? I believe Illinois is in the grip of special interests that defeat bills that would make it easier to get property cleaned up and help local jurisdictions recoup their costs. Being able to collect municipal expenses on next year’s tax bill for a problem property with a process that is simple and direct is a terrific tool that I wish I could use in my practice. It would eliminate the helplessness inspectors experience during the gap period, from the time the homeowner walks away from a property and the time the lender takes title. I envy my Minnesota colleagues.
For anyone who is not aware of it, MERS was created by the mortgage banking industry to streamline the mortgage process by using electronic commerce to eliminate paper. Its mission is to register every mortgage loan in the United States on the MERS® System. If you are a member of government, you can access the information for free by applying for a username and password at http://www.mersinc.org/ppc/index.aspx This will enable an inspector to find out which lender has a mortgage, the history of it which may help in finding out the status of a foreclosure and who is responsible for the property. Once again, I’m grateful to Kelly Anbach for sharing this information with me. Many of these loans have been transferred when lenders fail. I have prosecuted cases where the lender has possession but doesn’t want to spend anymore money on a property that’s an albatross around its neck. These new lenders obtain the loans in bulk and often have no idea what junk they are receiving. In the meantime, the municipalities are trying to deal with these blighted properties and trying to get the lenders to take responsibility whether they want to or not. Sometimes we have to threaten demolition if there’s no agreement. The quicker we can get to a responsible party, the more likely it is we can salvage a property before it deteriorates and requires demolition.
Once again, I’m thanking Kelly Anbach, inspector for the Village of Hinsdale for finding out about a new program. Detroit is working with lenders to keep foreclosed homes occupied with a special program, ROOF (Retaining Occupancy On Foreclosure) whereby former owners of these homes are allowed to stay in them if they pay for the utilities, a fee tied to their income and other costs. When the homes are sold, occupants can receive refunds of up to 50% of the monthly fees they have paid, if they have maintained the property and moved out on time. This sounds like a great way to keep the maintenance up on the property until a new owner takes over. You can read more about it at: http://www.freep.com/article/20091122/COL06/911220515/1322/Detroit-program-to-keep-people-in-foreclosed-homes
Commercial building foreclosures are going to be a big problem in 2010. Many communities already have these “zombie” buildings which were built during the good times but have stood empty or half-built. In some situations, inspectors I work with are going forward with demolition lawsuits or condemnation. Others just remain empty hoping for better days. This link contains an interesting video on the problem. http://www.huffingtonpost.com/2009/11/20/zombie-buildings-are-they_n_365400.html
Inspectors in communities with high end homes should be vigilant in light of a recent Wall Street Journal article. http://online.wsj.com/article/SB125530360128479161.html?mod=rss_US_News Foreclosures are rising in the top end of the market and decreasing at the lower end. Many of these homes had exotic mortgages that allowed people to defer paying the principle. Now, however, they can’t refinance their way out of huge payments when the mortgages reset. I’ve seen this happen in my local community. My husband and I could never figure out how all of these young people with small children could afford the McMansions that were being built. We always wondered where the huge incomes came from to go along with the huge mortgage payments. I realize now that many of them were refinancing their way out of problems. Police officers told me that many of them were only half furnished. People were viewing homes as an investment instead of shelter. When the loan reset, it was time to refinance. But, a year ago the “music” stopped and owners couldn’t get a new loan, especially with home prices going down. That’s when the “For Sale” signs started appearing. We’ve seen a number of these behemoths sitting now for a few years without a sale. It’s a trend to keep on top of which is why I like vacant building ordinances.
There is an interesting map that show the distribution of foreclosure properties throughout the United States. You can find the map at http://data.newyorkfed.org/creditconditions/ It is courtesy of the Federal Reserve Bank of New York. California and Florida are still the worst states for these types of properties. What’s especially useful about the map is that you can click on a county and it will show the data for that location.
Tom Pahnke, an inspector for Manhattan, IL, commented on my recent post about people selling things out of their foreclosed homes. His town has a best practices procedure that includes the police department in monitoring these homes. He even notified an attorney for a lender when he noticed people offering items for sale on Craig’s List. The attorney was able to get a restraining order. Tom said he routinely looks at Craig’s List and local papers to see what’s going on. Tom has generously offered to share a copy of his handout/presentation with anyone who’d like to contact him. He can be reached at tpahnke@VillageOfManhattan.org.
The Chicago Sun-Times has an interesting article in the paper today about how many homes are being stripped of everything before the lender takes possession. Certain items are considered part of the real estate. Those items are known as fixtures. A fixture is normally considered to be any physical property that is permanently attached to real property (e.g. molding, countertops, toilets etc.) so aren’t supposed to be removed when people lose their homes. http://www.suntimes.com/news/metro/1792042,CST-NWS-strip27.article I’ve heard this is going on all over the country to the extent that some lenders are paying people facing foreclosure to leave without damaging the property. What caught my attention is how difficult it is to prosecute the guilty party. As a former assistant state’s attorney I know how challenging it can be to prosecute someone for criminal damage to property or theft unless there is an eyewitness. While some guilty parties may confess when confronted by the police officer investigating the case, suspects often know that there is no way to prove the case against them without an admission of guilt. Just because they had the opportunity commit the damage or steal doesn’t mean a prosecutor can prove it beyond a reasonable doubt. Many times vandals strip empty houses so it’s not necessarily the former homeowner who is the perpetrator. It presents a real dilemma for the police as well at the lender. Of course, if an officer finds the former homeowner listing the old kitchen cabinets on Craig’s list, that case has possibilities.
