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3.12 acres at Charles Pointe up for foreclosure sale, unless court grants injunction

CLARKSBURG — Attorneys representing the interests of Bridgeport developer James Corton have gone to court to try to block a foreclosure trustee sale of 3.12 acres at his Charles Pointe Tax Increment Financing development.

The property is located immediately next to the new Harrison/Taylor E911 Center, just across Denton Drive. The land — still an empty lot — had been intended for a hotel that was to have been completed by late spring 2015.

Morgantown developer John J. Miller, of Centurion Development Group, had planned to build out the hotel through Bridgeport Suites LLC. Miller is named as manager and organizer of Bridgeport Suites LLC on the West Virginia Secretary of State’s website.

To foreclose on the loan on behalf of United Bank, Morgantown attorney Keith Pappas has been scheduled to sell the Genesis Boulevard property at the main entrance to the County Courthouse. Harrison Chief Judge James A. Matish will preside over the court case.

The bank is trying to recover a $509,000 loan to Miller and his wife. The two obtained the loan to close on the $1.72 million property they bought from Corton’s Ann’s Run LLC, according to court papers. The balance of the purchase price was accounted for by Corton’s Charles Pointe Hotel Partners LP receiving an 86.24 percent interest in Bridgeport Suites.

Part of the original deal completed with a Nov. 3, 2013, deed was for Ann’s Run and Charles Pointe Hotel Partners to be able to buy the property back, Corton’s lawyers indicate. That provision had multiple deadlines, including one that would allow it to kick in if the hotel wasn’t built by mid-2015. The provision to buy back the property envisioned Ann’s Run and Charles Pointe Hotel Partners would pay 90 percent of the original price to Bridgeport Suites.

The deed of trust now stands in the way of that sale and could result in the bank, through Pappas, putting the property on the auction block Friday.

Attorneys Jim Christie, of Bridgeport, and Julia Chico Abbitt, of Morgantown, indicated the bank ought to be going after Miller and/or his Centurion Development Group, but not the property.

“Miller was not and is not the manager of Bridgeport Suites,” Christie and Abbitt wrote. “Centurion is the manager of Bridgeport Suites. Miller in his personal capacity did not have the authority to grant a collateral interest in the property to secure the loan by defendant to the trust.”

Selling the property would be unlawful and would “cause substantial harm to the plaintiffs, including a loss of Plaintiff Charles Pointe Hotel Partners LP’s 86.24 ownership interest in Bridgeport Suites, since Bridgeport Suites’ sole asset is the property.”

A letter Corton wrote July 19 that provided notice exercising right to repurchase the property indicated some taxes on the land hadn’t been paid. The letter also noted “the invalid deed of trust granted.”

The court filing didn’t indicate why efforts to repurchase the property hadn’t been undertaken in the years since the deadlines had passed allowing for such action.

The Exponent Telegram published a story July 17 on its website that the commissioners suddenly were looking at other possible sites for the E911 Center. At that point, the E911 Center was planned for Quarry Drive in the Summit Park area. The commission, which had spent about $1 million for design and site work at the Quarry location, voted 2-1 Aug. 2 to instead revamp the existing building at 735 Genesis Blvd. in Charles Pointe.

Addressed to John J. Miller, manager, Bridgeport Suites LLC, the July 19 letter from Corton states fiscal 2016 taxes of about $31,600 hadn’t been paid. Also, fiscal 2017 first-half taxes of about $15,150 also hadn’t been paid. The letter asserted that after subtracting those taxes and recording costs, the 90 percent sale price would be about $1.49 million, with $1.2 million retained by Ann’s Run for Charles Pointe Hotel Partners’ interest in Bridgeport Suites. The letter also envisioned United Bank getting about $291,000 as a partial payment on what it termed was the J.J. E.G. Millers Family LP loan.

“It will be necessary for the Millers Family Trust to secure a release from United Bank to order to cause the property to be free and clear of the invalid lien,” Corton wrote.

Article source: https://www.theet.com/news/free/acres-at-charles-pointe-up-for-foreclosure-sale-unless-court/article_c9a8ec73-cee2-514b-be15-6bfa9316c348.html

Hurricane Irma aid ranges from waived credit-card fees to …

Central Florida’s Hurricane Irma victims have become eligible for everything from waived late fees on credit cards to tax extensions and delayed foreclosures under a wave of new public and private aid.

With the region designated for “individual assistance” by the federal government, a range of public and private programs become available. Some target residents impacted by the hurricane, while others are aimed more broadly at anyone who lives in the region.

“I cannot count how many folks in Lake County and throughout all of District 15 I spoke to personally, telling me they can’t even get to work or find groceries for their kids, let alone make a tax filing on time,” said U.S. Rep. Dennis A. Ross, a Republican who advocated for federal tax relief.

Aid and provisions granted to residents of Central Florida and other areas designated for greater federal relief include:

Looking to buy cheap? Consider a foreclosure … carefully

Rick Felix paid $200,000 for a four-bedroom, split-level foreclosed house in Ambler. He made the payment in cash without any option to inspect or even get a good look inside the place beforehand.

When he did get in, the roof was rotting, the septic tank was failing, the pool was green with algae, and the place needed to be gutted.

He couldn’t believe his luck.

Beneath all that neglect, Felix, 34, saw a starter home for him and his fiancee.

“It’s a desirable area, in a great school district, a great piece of land. As far as real estate goes, it was mind-boggling to everyone that this house hadn’t been picked up yet,” Felix said. “Honestly, when I saw it pop up when it did, it was a godsend.”

The couple, who bought the house with the help of a Realtor once it hit the market, are looking at three months and upward of $100,000 in renovations. They count themselves among the savvy homeowners who have successfully navigated the complex and high-risk, high-reward world of buying a foreclosed house.


Tom Gralish/Staff Photographer

If home owners fail to pay their mortgage and can’t pay off outstanding debt, or arrange with the bank to sell the property at a loss, the home goes into mortgage foreclosure. The process from unpaid mortgage to auction can take more than a year, during which owners often don’t maintain the property. If a home doesn’t sell at auction, the lender, usually a bank, assumes the property and puts it on the market.

In Philadelphia, about 528 foreclosures will go to sheriff’s sale in September, and about 2,133 bank-owned houses in Pennsylvania and New Jersey are on the multiple listing services database. Nationally, there were 933,000 foreclosures in 2016, a 10-year low.

Pennsylvania ranked 12th in foreclosures as of August 2017, according to ATTOM Data Solutions, a firm that tracks foreclosures, with one of  about every 2,000 homes foreclosed. New Jersey ranked first with one of every 663 homes foreclosed.

With a shortage of housing stock  in the Philadelphia region, more people are looking into foreclosures, real estate agents say. But buyer beware: Sometimes a good deal is actually too good to be true. And a novice looking to buy can get beat out by investors who come with cash in hand and make a business out of buying and flipping distressed homes.

“When someone says, ‘I want to buy a foreclosure,’ I say, ‘So does everyone else,’ ” said Orlando Martinez, a Philadelphia-based real estate agent who frequently sells foreclosed houses. “Everyone wants to buy a foreclosure because they assume it’s the best deal. It’s not necessarily the case.”

Before turning to foreclosures, Martinez encourages his clients to look at auctions, properties that have been on the market for a while, or short sales, in which the bank agrees to accept less than what the homeowners owe on their mortgage. Foreclosures, he said, get a lot of exposure and can be very competitive.

Look to buy a foreclosed home, real estate agents interviewed said, only if you have cash on hand, construction know-how, or a contractor to work with, and a flexible timeline for moving in.

Mortgage companies typically want proof that someone buying a foreclosed house has the means not only to pay the mortgage but also to fix up the house, because the houses are rarely move-in ready.

Banks tend to accept the offer with the fewest contingencies and will often go with the bidder who waves a contingency period and home inspection. Cash offers are also preferred.

“I would say to anybody who’s looking to purchase, don’t rush anything, don’t be impulsive, educate yourself, try to get as much history on the property as you can beforehand,” Martinez said. “Always make sure the value is in the point of purchase, not what you plan on building into the property. Never purchase something off the expectations. Purchase it for what it is because what it is is what you get.”

Before foreclosures go on the real estate market, they’re put up for bid at sheriff’s sale.

The number of people bidding at those sales has increased substantially in recent years, Inspector Marquet Parsons of the Philadelphia Sheriff’s Office said. Parsons didn’t have exact numbers but said he’s seen bigger crowds, and the office had to add a second monthly informational class for those interesting in buying at sheriff’s sales.

While investors and developers come from all over the country, about 75 percent of those who bid at the sales are families looking for a cheap starter home, Parsons said.

The winning bidder needs a minimum of 10 percent of the sale price and has only 30 days to pay the balance or forfeit that deposit.

Parsons sees people with excellent credit make the mistake of bidding on a property and putting down a deposit, only to find out they can’t get a bank loan because banks typically require inspections and appraisals.

Whether they are buying a foreclosed house at sheriff’s sale or through a real estate agent, Parsons tells prospective buyers to find out as much as possible about the property without knocking on the door or trying to go inside. Look at  licenses and inspections records, and check the zoning regulations if the property is going to be used for something other than a residence.

Realtor Michael Cohen, who represents banks during foreclosure sales and sells about 100 a year, doesn’t recommend that novices go straight to sheriff’s sales. Only a small number of homes sell each month, so buyers can usually get a shot at them once they go on the market.

“It’s too high risk. It’s like going to Atlantic City,” Cohen said. “It’s a hard gamble because you really can’t see what you’re buying. It’s really for the advanced investor.”

And if you’re eager to move in, buying a foreclosure is probably not a wise move.

In addition to the time it takes to complete renovations, there is a small chance that the former tenants — or squatters — refuse to leave even after the deed has been transferred.

There’s no “do-it-yourself” eviction in Philadelphia. In fact, an illegal lockout can cost a person $300 for every day the squatter is locked out of the property. Eviction proceedings in court can take four to six months — or longer if the tenant appeals.

Felix estimates that repairs of the Ambler house will cost around $100,000, but he owns a remodeling business and his fiancee, Amber Verazin, is an interior designer, so they will save a lot on labor costs.

If Felix can entirely upgrade the house, he thinks it will be worth about $425,000 — $125,000 above what he paid and what he thinks he’ll spend on repairs. The median home price in the neighborhood, located in the highly rated Upper Dublin School District, is $347,000.

The couple closed on the house earlier this month and hope to get renovations done ahead of their December wedding.

“As soon as I get the permits,” Felix said, “the work starts.”




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Article source: http://www.philly.com/philly/news/looking-to-buy-cheap-consider-a-foreclosure-carefully-20170915.html

Index Reveals a Rise In Foreclosure Activity – DSNews

A monthly report that covers bankruptcy, foreclosure, consumer confidence, and other data was released Thursday revealing that foreclosures are increasing—and bankruptcies could be close behind.

LegalShield, a provider of legal safeguards and identity theft solutions, released its LegalShield Law Index that uses five indices: the LegalShield Consumer Financial Stress Index, Bankruptcy Index, Housing Activity Index, Foreclosure Index, and Real Estate Index. The indices rely on LegalShield’s unique and proprietary database of member demand for and usage of legal services as well as a close tracking of the Consumer Confidence Index by The Conference Board, Housing Starts report by the Census Bureau, and Foreclosure Starts by the MBA.

In its Foreclosure Index, foreclosures worsened, which is reflected in a 5.1 point rise to 63.8 in August, even though foreclosures remain down nearly 5 percent year-over-year. LegalShield said if debts such as student loan, credit card, and auto increase, bankruptcies could also be on the rise, mainly due to consumer financial health being weighed down.

“While confidence remains an important economic indicator, our data suggest that confidence is inflated right now,” said James Rosseau, LegalShield’s Chief Commercial Officer. “Decision makers who rely heavily on confidence measures in forecasting consumer spending may be disappointed.”

Rosseau said the inflated confidence is due to what they believe is stubborn optimism. Though consumers have reason to be assured about the economy, and LegalShield hopes for continued economic strength, their data has worsened in recent months.

“In light of these developments, we want to make decision makers aware that consumer spending will likely continue to fall short of the levels implied by consumer confidence,” Rosseau said. “In short, the consumer picture is pretty good, but not gangbusters.”

LegalShield publishes the Law Index on the sixth business day each month. To read the full report, click here.

Article source: http://www.dsnews.com/daily-dose/09-11-2017/index-reveals-a-rise-in-foreclosure-activity

Foreclosure inventory lowest in nearly a decade


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The foreclosure inventory rate and serious delinquency rate remained low in June according to newly-released data from CoreLogic.

Its Loan Performance Insights Report shows that 4.5% of mortgages were in some stage of delinquency nationally, down from 5.3% a year earlier.

The foreclosure inventory rate was 0.7%, down from 0.9% in June 2016, and was the lowest rate since July 2007.

Early-stage delinquencies – those 30 to 59 days past due – were down slightly, from 2.1% in June 2016 to 2% in June 2017. The share of mortgages that were 60-89 days past due in June 2017 was 0.6 percent, also down slightly from 0.7 percent in June 2016.

“After peaking at 3.6 percent in December 2010, June’s 0.7 percent foreclosure rate was the lowest in 10 years,” said Frank Martell, president and CEO of CoreLogic. “Across the 100 most populous metro areas, the foreclosure rate varied from 0.1 percent in Denver-Aurora-Lakewood to 2.2 percent in New York-Newark-Jersey City.”

The share of mortgages that transitioned from current to 30 days past due was 0.9% in June, unchanged from a year earlier.
CoreLogic’s data forecast for home price appreciation calls for continued gains ahead while the employment rate continues to strengthen, which should lead to a further decline in the delinquency rate, the firm’s chief economist Dr Frank Northaft added.

More market update:

  • Mortgage applications for new homes rebounded in August
  • Prices on the rise as rental demand intensifies

Article source: http://www.mpamag.com/market-update/foreclosure-inventory-lowest-in-nearly-a-decade-78802.aspx

Alderbrook property owner dodges foreclosure

Colin Murphey/The Daily Astorian

Leroy Olvey has covered his Alderbrook property with protest signs.


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The owner of a sign-covered property in Alderbrook has dodged foreclosure, but could still face legal action if he doesn’t take care of issues that led the Astoria City Council to declare the site a nuisance earlier this summer.

Leroy Olvey, a lifelong Clatsop County resident, has paid the city $55,996, the full amount he needed to pay to halt a process that would have otherwise ended in foreclosure and a public auction of his Birch Street property. Past judgments related to the condition of his property, with relatively smaller fines attached, still remain unpaid. Nothing has changed on the property itself.

“While he’s paid his citation fines, there are still continued violations out there that he has not remedied,” City Manager Brett Estes said. “We still have the junk vehicles and the derelict building issues out there.”

For more than a decade, the city has tried to get the 77-year-old man to clean up his property. Instead, Olvey has covered the house and the yard with colorful signs expressing his opinions about world affairs and local figures, and protesting his alleged treatment by the city over the years. Trash is piled up inside the run-down house and broken, abandoned vehicles litter the overgrown yard. The property has become a neighborhood concern.

In June, the City Council declared Olvey’s property derelict and a nuisance, a tool the city has used to get other owners of run-down or abandoned properties in Astoria — like the Flavel home on 15th Street and Franklin Avenue — into compliance.

“The object of the city was not to get money, it was to clean the property up,” City Attorney Blair Henningsgaard said.

Paying the fines does not buy Olvey any time with the city, it simply halts the process set in motion by the City Council. Henningsgaard said he plans to talk with city councilors about how they want to proceed if Olvey continues to ignore the city’s requests.

“We’re going to be looking at other ways to address this chronic issue,” Estes said.

Olvey maintains his house began to go downhill, literally, after the city installed a sewer in his front yard that turned his property into the drainage point. Every year, he says, his yard floods and his house sinks. He has given up on trying to improve the property and believes he could have grounds for a lawsuit against the city, though he has yet to secure a lawyer. He did not seek legal help in dealing with the fines and the nuisance property designation levied against him this summer.

Though he paid these most recent fines, he says he has no intention of cleaning up the property. Instead, he is working on new signs.

“I’m going to bury it with signs,” Olvey said.


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Article source: http://www.dailyastorian.com/Local_News/20170913/alderbrook-property-owner-dodges-foreclosure

Esperanza mansion sued; in foreclosure – Penn Yan Chronicle

Esperanza Mansion, the landmark hotel, restaurant, and wedding venue overlooking Keuka Lake that closed its doors last year, has been dealt another financial blow.

Facing a class action lawsuit filed by banquet servers for unpaid gratuities, Esperanza owner David Wegman has agreed to a $210,000 settlement for the local workers employed by Esperanza between Aug. 2010 and Aug. 2016.

Named plaintiffs Shari Folts and Gail Owen filed the suit on behalf of themselves and all the other hourly banquet service workers against defendants Esperanza Management LLC, Esperanza Properties LLC, The Wegman Group LLC and David Wegman, individually and as owner of Esperanza Management LLC, Esperanza Properties LLC and the Wegman Group LLC. They claimed unpaid gratuities under New York Labor Law because Esperanza charged customers for “mandatory service charges” for banquet events but never passed the money on to those who worked the events. The attorney for the plaintiffs, Justin M. Cordello, says over 100 workers will be paid in the class action suit settlement, along with $70,000 in attorney fees and $10,000 in administrative charges.

Esperanza workers with questions or who wish to be included or excluded from the claass action suit should contact Ferr Mullin P.C., P.O. Box 440, Fishers, N.Y. 14453, 585-869-0210; email rlmullin@ferrmullinlaw.com.

Genesee Regional Bank in Rochester is also seeking to recoup money owed to them by Esperanza. In April, the bank’s commercial lending division filed foreclosure papers in Yates County Court, claiming over $2.86 million. The papers claim Esperanza and Wegman “have failed to comply with the conditions of said notes, mortgages, security agreements, and forbearance agreement by omitting and failing to pay items of principal, interest, taxes, assessments, water rates, insurance premiums, escrow, and/or other charges.”

When asked to comment via email, Wegman replied, “Esperanza has settled the servers’ suit and we are dealing with several potential buyers to purchase Esperanza.” Wegman has offered Esperanza for sale for several years, resorting last year to an online auction. That, however, failed to attract a minimum bid said to be over $3 million.

Article source: http://www.chronicle-express.com/news/20170913/esperanza-mansion-sued-in-foreclosure

Local delinquency, foreclosure rates drop

More serious delinquencies, those at least 90 days past due, fell to 0.8 percent in June, down from 1.1 percent a year ago. The foreclosure inventory rate was 0.2 percent, down from 0.3 percent in June 2016.

Article source: http://journalstar.com/business/local/local-delinquency-foreclosure-rates-drop/article_9a65534b-6216-55ef-a2a6-49f79cd6ecdc.html

Myth-busting the Detroit tax foreclosure crisis

At the time of this writing, Detroit is in the midst of yet another round of the staged cage-fight that is the tax foreclosure auction. In many ways this feels like an individual fight — one home at a time fighting to mitigate the harshest consequences such as eviction, homelessness, and permanent property damage. Yet this issue affects the city as a whole, and it’s important that we do not become desensitized to the routine social violence that it represents. The truth is that Detroit is for sale by our own local government, and it is time to challenge the convenient notions that help us fall asleep at night.

In its barest terms, here is how the tax foreclosure process functions in Detroit:

When you own a home, you have to pay taxes. Every year, the city of Detroit assesses the property value and issues two tax bills accordingly. Property taxes help pay for infrastructure, libraries, the zoo, schools, garbage pickup, and so on. If the city taxes are not paid, the debt gets passed on to the Wayne County Treasurer, which acts as a collections agency, tacking on 18 percent interest per each year if the taxes go unpaid. After three years, state law requires that the Wayne County Treasurer foreclose on the property and put it up for sale in an auction, where it is sold to the highest bidder.

Under this system, one out of every three Detroit properties has been put up for auction by the Wayne County Treasurer since 2002.

Understandably, the consequences of such massive forced turnover in property ownership are severe. The system provides a harsh penalty for violating the social contract: pay your taxes or lose your house. However, it fails to address the underlying reasons for tax delinquency or adequately recoup lost revenue, and leads to deep and enduring consequences that devastate the city as a whole.

Myth 1: The system is fair

Forget for a moment that Detroit already has one of the highest effective tax rates in the country. Let’s start by looking at the earliest stage of the tax foreclosure process, which is tax assessment. On an annual basis, every local taxing authority is required by law to assess the value of a property so that it can levy an appropriate tax bill. In Detroit, this was not done in accordance with the law for a number of years until 2017. One study by academic and activist Bernadette Atuahene shows that up to 85 percent of assessments violated Michigan law between the years of 2009 and 2015, and that homes with the lowest values were over-assessed by the greatest margins. This means that low-income homeowners bore the brunt of the injustice.

If taxes had been fairly assessed, plummeting property values would have created a severe deficit in the city budget and it may have also been tactically unfeasible to keep assessments up with the actual values due to understaffing at the city level and rapid changes in the real estate landscape. Regardless of the reasons, the fact remains that the very bills that are the basis for these foreclosures are fundamentally incorrect.

The city of Detroit was under state oversight for its handling of property assessments and addressed the problem with a wide-reaching reassessment effort, which resulted in reduced tax values for 94 percent of homeowners. While this was a welcome relief, the breadth of the change demonstrates the extent to which the assessments had been chronically incorrect. Atuahene’s research suggests that these adjusted assessments still fall short of correct values for properties under $18,000.

Even when current assessments are corrected, delinquent taxes still weigh in at the bloated values of past years — plus interest.

The volume of low-valued properties laden with impossible tax debt led the State legislature to pass a bill three years ago that would allow homeowners to cut their debt to half of the State Equalized Value. This was championed by Mayor Duggan as an outlet for at-risk homeowners and appeared to be an acknowledgement of the historically inflated assessments. The problem was that the Wayne County Treasurer issued almost none of these payment plans and they are no longer available because the state law that provided for it has since expired.

And so, many homes are lost each year in accordance with one law, while the debt that triggered the foreclosure is based on the violation of another law.

Myth 2: There is a safety net for poor people

One state law that helps to soften the draconian foreclosure system states that a homeowner who cannot pay their taxes because they live in poverty is eligible for a tax exemption. Fortunately, Detroit has a very generous “Poverty Tax Exemption” policy, which affords a low-income homeowner the chance to eliminate all taxes (other than waste pickup fees) for the year. Even so, this outlet is not advertised widely and a mere fraction of eligible homeowners actually receive it. Recent improvements have made application and approval easier, but further changes are needed to improve access. FOIA data shows that 4,000 households received the hardship exemption in 2016, yet the American Community Survey estimates 40,000 owner-occupied homes in Detroit earn under $25,000 per year, so it is clear that only a fraction of those who qualify for this exemption are receiving it.

Among low-income homeowners who do manage to get the poverty exemption, it is often too little, too late because the exemption cannot be provided retroactively under current policy, even if the homeowner would have qualified in past years. Once again, homeowners are left to play catch-up on the interest-laden over-assessed back taxes or risk losing their houses.

Another provision for struggling homeowners is the Step Forward program, which ostensibly provides relief for those “hardest hit” by the housing crisis. These are federal funds intended to pay off liens such as mortgage or tax delinquencies in order to allow residents to remain in their homes.

The fund is managed by the Michigan State Housing Development Authority (MSHDA), and, to date, about 10,500 Wayne County homeowners have received assistance. But as the mortgage crisis translated into a tax crisis, this resource has failed to adequately address the problem. About $39 million in homeowner support remains, but MSHDA’s narrow application criteria disqualify the majority of Detroit residents who apply. As a result, the money remains in the state’s hands while thousands of distressed owners lose their home for lack of relief.

Once homeowners lose their homes, they also lose their rights. Ownership and all equity in the property is lost, and residents become vulnerable to eviction, rent gouging, and land contract scams aimed at those desperate to break the cycle of displacement. All of the gains in black homeownership since the passage of the Fair Housing Act in 1968 have been reversed in the housing crisis, according to the Urban Institute.

Myth 3: We are winning in the fight on blight

In light of the inability of MSHDA to disseminate Hardest Hit money under the Step Forward program, local government has found a creative alternative use for these funds — blight removal. Currently, the Detroit Land Bank Authority has $139 million for demolition in the “Blight Elimination Program” from funding that was initially intended to bail out homeowners.

It is both more expensive and less effective to demolish a property than to prevent a foreclosure, yet there are more funds placed toward demolition and lower criteria for the use of those funds. While MSHDA denies half of homeowners who seek assistance, there are zero denials for demolition projects.

The basis for this practice is the idea that the presence of vacant, blighted homes risk the stability of the neighborhood by depressing nearby property values. Once demolished, a blighted home no longer exerts this negative influence on its neighbors. On its face this theory is not controversial, but it becomes messier in the context of the ongoing foreclosure crisis.

The average cost of demolitions clocked in at more than $14,000 at the end of last year — about twice the tax debt on the average occupied home in foreclosure, which is approximately $7,800. Stated another way, the $139 million blight dollars that could save over 17,000 homes will instead be used to demolish half that many houses (that, chances are, went through foreclosure in the recent past).

If these funds were used to prevent foreclosure, the delinquent property taxes of occupied homes could be paid in full, meaning that the homeowner would remain the owner, the government would collect its delinquent taxes, and the house would likely remain occupied.

Studies have shown that when occupied homes go through tax foreclosure, one in six become vacant within a year. When federal funding runs out, we will find that we have created more blighted homes than we demolished because we failed to address the root cause.

The sheer volume of blight that is propagated by tax foreclosure means that the use of Step Forward funding to remove blight is both less effective and more expensive. During a plague, one cannot invest solely in the morgue.

Myth 4: The auction is only for people who deserve it

One of the most insidious things about the tax auction is that it is such an effective tool for siphoning individually owned properties into the hands of relatively few mass-property owners. It is largely due to the tax foreclosure auction that the Detroit Land Bank Authority now owns an estimated 90,000 properties, and the auction has broadened the portfolio of individual investors by hundreds of properties each year. In last year’s auction about 1,525 properties — 26 percent of sales — were sold to the top 20 most prolific bidders. Those groups tend to target occupied homes for purchase, meaning that few, if any, of those properties will be owner-occupied in the future.

In 2014, Michigan passed a law to end abuse of the tax foreclosure system by those who intentionally dodge taxes, recycle their property through the auction, and buy it back at low prices. The law requires that anyone purchasing in the auction must agree to an affidavit stating that they had no delinquent taxes, unpaid civil fines or penalties. However, the law has failed to address the problem because it casts so wide a net that it does not differentiate between franchise slumlords, nonprofit support groups, and individuals with unpaid parking tickets.

Whereas an individual cannot easily change their name to avoid detection in the auction, companies have little problem reincorporating. There is the tongue-in-cheek “Ethical Property Management,” and the more brazen “Exit Strategy” umbrella of companies, which includes such names as “Exit Strategy April 13, LLC” and “Exit Strategy May 13, LLC.” Regardless of their methods, the fact is that we have neither laws nor enforcement that address the abuse of the auction by extractive property “investors.”

But the law is based on a tragic misconception: It is true that landlords may choose not to pay property taxes in order to extract rent without investing in the home, and may then try to buy that house or another in auction. On the other hand, it is not true that homeowners willfully shirk taxes they can afford to pay and put their very homes on the line in order to possibly get a deal. When owners could buy back in the auction, it was truly their last resort, and now that option no longer exists.

While companies escape scrutiny by mercurially reincorporating under different LLCs, individual homeowners dare not bid in their own name and nonprofits dare not help them. So, they are left as sitting ducks to wait out the auction until that inevitable knock comes on the door.

Myth 5: The crisis is over

Detroit got a new narrative when it emerged from bankruptcy and moved out of emergency management. The dream of the comeback is one that no one wants to refute, but the sad truth is that the neighborhoods are under attack in ways that more or less began in tandem with the fairy-tale ending.

The cornerstone of post-bankruptcy Detroit’s solvency plan was “credit worthiness,” as demonstrated by the prompt and aggressive collection of debts. Hence 2014 was both the peak of the Detroit water crisis, in which 33,000 homes had water service shut off, and of the tax foreclosure crisis, in which over 7,000 occupied homes were sold in auction to the highest bidder.

These draconian measures demonstrate to creditors that Detroit intends to collect on its debts and is therefore a viable asset. Unfortunately, this deference to short-term financial solvency values punishment above consequences and individual accountability above collective cost. Each year, there are fewer and fewer households with water to shut off, fewer owners to strip of their title. That is why, even when the numbers go down, they do not add up to success because we have in no way recovered from the impact of the years before.

The roots of the tax foreclosure problem are neither simple to trace nor easy to solve, but in many ways this is a government problem that requires government solutions. Fortunately, there are many actionable government solutions that could have immediate positive effect including use of “Right of Refusal” by local bodies to protect occupied homes, improved dissemination of Hardest Hit funds, expansion of proper tax assessments and exemptions, and changes in state law that allow retroactivity for exemptions and greater local control. What’s needed is for all levels of government to act where they can and work together, rather than pointing fingers or avoiding the issue.

Tax foreclosure is an autoimmune disorder attacking the body of Detroit: it drives poverty, serial displacement, blight, and crime; it hinders schools, public utilities and infrastructure; it dissolves the intangibles like sense neighborliness, community, stability and sense of place. The truth is, it doesn’t have to be that way. And the truth is there can be no true comeback until we stop destroying what we already have.

Michele Oberholtzer is the coordinator of the tax foreclosure prevention project with United Community Housing Coalition. She is also the founder of the Tricycle Collective, a woman-led volunteer nonprofit working to support Detroit families with young children who live in homes facing tax foreclosure. More information is available at thetricyclecollective.com.

Article source: https://www.metrotimes.com/detroit/myth-busting-the-detroit-tax-foreclosure-crisis/Content?oid=5552983

Foreclosure Proceedings Limited

A Maine supreme court has ruled that foreclosure proceedings are limited to one attempt, according to a report. While foreclosure may be a long and drawn out process, there could be new hurdles to surmount in the future.

Recently, Fannie Mae attempted to initiate a second foreclosure proceeding on a family located in Maine. The family first bought the property in 2004 for $127,920, and initial foreclosure proceedings were filed in 2011. According to the report, lawyers representing the GSE failed to respond to the judge’s orders, and in result the judge dismissed the case.

The GSE attempted to initiate a second foreclosure proceeding, but the family fought the ruling, stating that the second suit was no different than the first. The court sided with the family.

Default in rural Maine is a deep seeded issue due to industrial economies, according to the report. The family’s property value fell by over 70 percent, putting them deep underwater.

In response to the decision, the family’s attorney issued this statement, “It reinforces case law that says you really get only one bite of the apple,” said James Cloutier.

According to the report, Fannie Mae did not return a call for comment.

Article source: http://www.dsnews.com/news/09-11-2017/foreclosure-proceedings-limited