During the Summer of 2019, following increased gun violence and tragedies that took the lives of children, Mayor Eric Johnson announced the creation of the Mayor’s Task Force on Safe Communities. The Task Force received the mandate to provide recommendations to
the Mayor on non-law enforcement solutions to crime and violence in Dallas.
On January 9th, Mayor Johnson released the Task Force’s report, with the first recommendation to “Remediate blighted buildings and abandoned lots in high-violence locations”.
To view the Mayor’s Press Release and the report in its entirety, please click here.
To view a media article on the report from NBCDFW, please click here.
The report references a 2015 report from the Center for Community Progress. This report can be accessed by clicking here.
“Most issues can be traced back to faulty loan servicing with an often-revolving cast of loan companies”
Similar quotes were frequent during the last foreclosure crisis. However this quote comes from a USA Today report on reverse mortgages and the challenges heirs experience, including foreclosure.
To view the article, please click on the following link:
As reverse mortgages end, heirs are left with heartache
On December 18th issued the following press release regarding his signing of the “Zombie Property Remediation Act of 2019”
To view the final language, please click here.
To view local reporting, please click here.
New Law Authorizes Municipalities to Compel Mortgage Lenders to Either Complete a Mortgage Foreclosure Proceeding or Issue a Certificate of Discharge for Abandoned Properties
Governor Andrew M. Cuomo today signed legislation (S.5079-A/A.1859-A) – or the Zombie Property Remediation Act of 2019 – allowing municipalities to better address zombie properties that are plaguing their communities. The new law will authorize local governments to compel mortgage lenders to either complete a mortgage foreclosure proceeding or to issue a certificate of discharge of the mortgage for any abandoned property, allowing local government officials to deal with these properties that decrease surrounding property values and put on a strain on municipal resources.
“Zombie properties are plaguing communities all across our state, driving down property values and burdening our taxpayers,” Governor Cuomo said. “By making it easier for local municipalities to deal with these abandoned and unmaintained properties, we are helping to preserve homes and protect the quality of life in our neighborhoods.”
Thousands of abandoned properties are blighting communities throughout the state, and zombie properties – abandoned homes that have been foreclosed upon by a bank and are not tended to by anyone – are complicating the efforts of local government officials to deal with these properties. Zombie properties can sit in legal foreclosure limbo for years, sometimes deteriorating to the point that the buildings must be demolished while the mortgage lender fails to complete the foreclosure process. This new law will make it easier for municipalities to reclaim and redevelop zombie properties in order to return them to the property tax rolls.
This new law goes into effect immediately.
Senator James Skoufis said, “Zombie properties across New York State continue to plague our main streets, are dangers for first responders, and make code enforcement an even more difficult task than it already is. This law will equip municipalities with a real tool to better hold big banks accountable to our communities, clean up our neighborhoods, and strengthen our property values. I thank the Governor for signing this bill into law and look forward to continuing to fight for our local governments and taxpayers.”
Assembly Member William Magnarelli said, “I thank the Governor for signing this important bill into law. ‘Zombie’ properties continue to plague our communities and damage neighborhoods. The new law will give localities a legal remedy to compel action on these abandoned properties by mortgage holders. This will help get them out of limbo and return them to the tax rolls and productive use.”
Following a March 4, 2019 referral to the Senate Budget and Appropriations Committee, S1155 was reported from the Committee and given a 2nd Reading.
To view the current text of the proposed bill, please click here.
Synopsis: Requires registration of certain vacant and abandoned properties with municipalities and provides enforcement tools related to maintenance
of these properties.
BILL DESCRIPTION
This bill requires the responsible party for a vacant and abandoned property to register the property with the municipality in which the property is located. The bill also provides certain enforcement tools related to the maintenance of these properties.
Specifically, the bill establishes a registration requirement for all vacant and abandoned residential and commercial properties. A property would be considered vacant and abandoned if it is not legally occupied by a mortgagor or tenant for residential or business purposes, it cannot be legally reoccupied, and at least two conditions which indicate abandonment exists. The title holder or mortgage lender responsible for maintaining a property would be required to register the property.
Under the bill, a municipality may establish a fee of not more than $250 for the initial registration of a vacant and abandoned property. Thereafter, a municipality may impose a renewal fee of not more than: (1) $500 if there is an outstanding property maintenance or code violation that remains unabated at the time of renewal; or (2) $750 if there continues to be a violation or there is a new violation that remains unabated at the time of renewal. However, if a greater fee for the registration or renewal of a vacant and abandoned property was established by a municipal ordinance adopted prior to the enactment of the bill, then the bill permits the municipality to continue to impose and collect that greater fee.
The bill also authorizes a municipality to require responsible parties for vacant and abandoned properties to undertake certain protective measures regarding these properties. Specifically, a municipality would be able to require a responsible party to enclose and secure the property against unauthorized entry, post a sign on the property with pertinent contact information, and maintain liability insurance.
Additionally, the responsible party would be liable to pay a penalty of not less than $500 and not more than $1,000 for a violation of the bill or any ordinance adopted pursuant thereto. If a greater penalty for these violations was established by a municipal ordinance adopted prior to the enactment of the bill, that greater penalty may continue to be imposed and collected. Each day
that a violation continues would constitute an additional, separate, and distinct offense.
On October 22, 2019 the Office of the Comptroller of the Currency (OCC) amended the regulations and issued a final rule, effective December 1, 2019, for “other real estate owned,” activities for national banks and Federal savings associations.
Following is the summary from the OCC.
The OCC is issuing a final rule to clarify and streamline its regulation on other real estate owned (OREO) for national banks and update the regulatory framework for OREO
activities at Federal savings associations. The OCC is also removing outdated capital rules for national banks and Federal savings associations, which include provisions related to OREO, and
making conforming edits to other rules that reference those capital rules.
Michael Best & Friedrich LLP in a November 11th client alert, provided a thorough summary.
OREO Regulations: Comptroller’s Office Issues Amendments to Regulations on “Other Real Estate Owned”
The federal Office of the Comptroller of the Currency, or OCC, regulates national banks’ ownership of a category of real estate called “other real estate owned,” commonly shortened to OREO. It has been more than 20 years since OCC updated these regulations. That changed on October 22, 2019 when OCC amended the regulations and issued a final rule, effective December 1, 2019, which addresses two areas: (i) clarifying the rules for holding and disposing of OREO, and (ii) eliminating outdated capital rules. The OCC summary explained that the purpose of the amendments is to clarify and streamline the regulation for national bank OREO activities, and to apply that framework to the OREO activities of Federal savings associations.
OREO is bank owned real estate, acquired by the bank in full or partial satisfaction of a debt, and former banking premises, which are held as non-earning assets. The regulations are based on the idea that banks are not, and should not, be in the real estate investment business; they should rather lend money to people who are. As observed after the 2008 credit crisis and ensuing recession, a large portfolio of real estate owned by a bank is not a good thing; it may be a sign that loans are defaulting, resulting in borrowers surrendering properties to the bank, or the bank acquiring properties through foreclosure. A growing OREO portfolio may also be a red-flag to regulators of impending greater problems. The Treasury Department, through OCC, therefore, sets the rules by which banks may hold this nonproductive real property, how they appraise it, how they dispose of it, and how they record the investment proceeds.
The amendments generally maintain the existing standards, including definitions of OREO, market value, and recorded investment amount, and then extend the standards applicable to national banks to Federal savings associations through the OCC’s supervisory powers over Federal savings associations granted in the Dodd-Frank Act. There are a few clarifications however to the older rules worth noting.
First, when an institution acquires OREO by merger or acquisition, the relevant holding period commences on the effective date of the transaction, but does not include any time the acquired entity held the OREO. Second, OREO may now be disposed of under the rules in other ways approved by OCC such as by donating or escheating OREO, or by negotiating early termination of OREO leases; Federal savings associations may also transfer OREO to a service corporation. Third, an appraisal may not be required at acquisition, if doing so would be unreasonable or unsafe due to holdover tenants or squatters, but must be updated as soon as the bank gains access. Fourth, Generally Accepted Accounting Principles, or GAAP, now apply to OREO. Fifth, the Appendices to the old regulations, containing the risk-based capital guidelines for national banks and capital requirements for Federal savings associations, have been rescinded. New clarifications were also added regarding capitalized and operating leases, and the ability of a bank to own real estate for its own use in banking activities. The amendments codified that banks may pay normal operating expenses of OREO (such as taxes, insurance and utilities), and expenses of a business associated with the OREO property.
The complete amended regulation may be found at 84 Fed. Reg. 56369 (Oct. 22, 2019).
In an aggressive approach to “zombie foreclosures, at the request of Alderman James Martuscello, Amsterdam NY Common Council members unanimously voted against removing a property from the tax auction list and accepting a payoff payment from the mortgage holder. Alderman Martuscello. said he is concerned about mortgage holders that obtain properties in the city and allow them to sit vacant for years at a time.
“If they don’t clean them up and sell them, they are just going to go to waste. We can’t let the banks do this anymore. We have to send a message out to them that if they don’t sell them, we are going to sell them for them.”
“If we give it back to the bank, you know what’s going to happen? It’s going to sit there again for another two years, because it has been sitting there. The bank has done nothing to this property. It’s a zombie property.”
To view the full story from The Recorder, please click here.
As previously reported, Pennsylvania Governor Wolf has taken an aggressive approach to the fight against blight. Additional information is now available on the Governor’s website.
For an overview of the Combatting Blight component, please click here.
To watch an informative video, narrated by PA Lieutenant Governor, please click here.
To view a fact sheet on the Combatting Blight component please click here.
Flint MI was one of three recipients of the Cities of Service 2019 Engaged Cities Award. Underwritten by Bloomberg Philanthropies, the award recognizes cutting-edge techniques to engage residents to solve problems.Each winning city receives a prize of $75,000 that can be used at their discretion in support of furthering the city’s efforts to engage their citizens to tackle problems.
In response to significant property blight caused by a massive decline in population, the city, in partnership with Genesee County Land Bank, created the Flint Property Portal, which allows residents to easily report information on properties. Data collected through the portal enabled the city to receive a $60 million blight elimination grant through the U.S. Treasury Hardest Hit Fund. The grant funds have been used to demolish more than 4,000 blighted structures in Flint. The Land Bank planted low-growing clover in the cleared lots, which significantly diminishes maintenance needs and costs. Community members have since submitted more than 120,000 property messages through the portal, including self-reporting maintenance for 690 vacant lots.
For additional information, please click on the following links;
Cities of Service Press Release
Massachusetts H 177 (and accompanying bill S 1627) originally introduced in January had hearings in October.
The bill “would form a commission to study strategies for improving the quality of housing stock in weak markets, task the Executive Office of Housing and Economic Development with developing a “capacity building program” to help cities and towns with neighborhood stabilization and housing improvement efforts, and create a “spot blight rehabilitation program” focused on abandoned and vacant residential properties.”
For additional information, please click here for an article from the Salem News.
To view the text of the proposed bill, please click here.
Following a recent report of a resident of Cleveland Heights, Ohio, 57 and uses a wheelchair who is facing jail time because of housing code violations, Christina Plerhoples Stacy and Joseph Schilling with the Urban Institute addresses critical housing code enforcement questions.
“What are these codes meant to promote—the health of occupants and the public or community aesthetics? How do these codes vary from place to place? And who is affected by these codes and decisions about how to enforce them?”
To view the article in its entirety, please click here.