There’s a bill pending in Illinois which would allow local governments to pass ordinances that would make lenders responsible for the upkeep of vacant properties in foreclosure. Needless to say, the lenders are fighting the bill. They’ve proposed a $50 fee per foreclosure that would go into a pool that local governments could draw from to reimburse themselves for their costs. $50 per property, hmmmm, that’ll go really far. Maybe it’ll cover half a lawn being cut, once. They must really think we’re stupid. I’m disheartend that when I contacted my state rep, I received a nice “thanks for your e-mail” message, completely ignoring the expertise on this issue I’ve developed. The banks say that they just wouldn’t be able keep up with all of the municipal ordinances that might be passed; maybe they would then know what it’s like to be an inspector who is desperately trying to reach a live human being at a lender when a property has 6 feet of water in the basement of a vacant home under foreclosure. I wish I wasn’t so cynical about the political process. I wish I believed it was possible that politicians would do the right thing and help local government preserve neighborhoods. I want to believe that if they only knew about the problems we face, they’d give us some meaningful tools. But, if they ignore our attempts to educate them, how can they make an informed decision?
I recently completed a 2 month period of travel all over the Midwest doing trainings for building officials, fire inspectors, property maintenance and housing inspectors and law enforcement officers in Columbus, Ohio, East Liberty, Iowa, South Bend, Indiana, Troy, Michigan, East Peoria, IL and Sheboygan, Wisconsin. All of them are facing challenges because of the foreclosure crisis and are trying to respond with reduced resources. I want to say how much I appreciate the hospitality I received wherever I went and the enthusiasm of the participants. It gives me great hope when I see the number of inspectors who take the time to come to the classes I teach so they can enhance their skills and keep trying to improve their communities. At a time when so many public employees are feeling unappreciated and under attack, I just wanted to extend my thanks to everyone who made my trainings a rewarding experience.
Should lenders allow buyers to purchase a foreclosed building for less than what the lender can get for the property so the buyer has enough money left over to fix it up? That’s the question posed in an article in the Wall Street Journal, Tenants Turn to Lenders to Repair Buildings. Some housing groups are pressuring lenders to do this because it does no good for a building to change hands if the new owner can’t bring the property up to code. It’s a novel approach to the problem of deteriorating properties.
In the past I’ve recommended books on the foreclosure crisis such as Michael Lewis’s The Big Short. Last night I finally got to see “Inside Job”, the film that won the Academy Award this year for best documentary. It methodically lays out how the problem developed, the nature of the crisis and the response by both government and Wall Street.
‘Inside Job’ provides a comprehensive analysis of the global financial crisis of 2008, which at a cost over $20 trillion, caused millions of people to lose their jobs and homes in the worst recession since the Great Depression, and nearly resulted in a global financial collapse. Through exhaustive research and extensive interviews with key financial insiders, politicians, journalists, and academics, the film traces the rise of a rogue industry which has corrupted politics, regulation, and academia.
It’s interesting that public employees are being blamed for the money woes in this country when the entire financial crisis was Robin Hood in reverse, steal from the poor (or middle class), and give to the rich. I encourage everyone to rent the DVD of this film so we keep our focus on the people and systems that brought this all about. If we don’t, we will find ourselves in the same situation in the future. Charles Ferguson, the director, said, when accepting the Academy Award, that none of the people in the film have been indicted and no one’s gone to prison. After watching the movie, you’re going to ask “why not ?”
One of the most difficult situations I deal with as a prosecutor is trying to find someone to take responsibility for a property where it is in foreclosure, the owners have abandoned the building and the lender fails or refuses to complete the foreclosure process. Some nonprofit organizations are stepping in under those circumstances and using state laws on abandoned properties to take them over, fix them up and then sell them. One such organization is featured in an article in the Huffington Post. Unfortunately, in some states, the waiting period for action is lengthy. While the clock is running, the property continues to deteriorate. It is shocking to me that legislatures fail to address the problems these derelict properties create for communities and local government. Far too often state law protects lenders from having to take possession of these properties and maintain them prior to the foreclosure judgment even though the owners are no longer around and the mortgage document gives the lender the right to ask for possession. These nonprofits that take on this difficult task should be applauded for their efforts but there aren’t enough of them to make a dent in this horrendous problem.
