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VACANT PROPERTY REGISTRATIONS PROGRAMS

Do YOU need one?. VACANT PROPERTY REGISTRATIONS PROGRAMS. Presented by – Doug Leeper, Code Enforcement Solutions CodeSolutions@sbcglobal.net (619) 791-9292. Experience. 25+ years in local government Fire Fighter Police Officer Code Enforcement Officer/Manager

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VACANT PROPERTY REGISTRATIONS PROGRAMS

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  1. Do YOU need one? VACANT PROPERTY REGISTRATIONS PROGRAMS Presented by – Doug Leeper, Code Enforcement Solutions CodeSolutions@sbcglobal.net (619) 791-9292

  2. Experience • 25+ years in local government • Fire Fighter • Police Officer • Code Enforcement Officer/Manager • Supervised enforcement of over 30,000 cases • Testified before Congressional Sub-committee on Domestic Policy • Finalist Harvard Innovations in American Government Award • 5+ years as CE consultant • Speaker/Panelist at conferences of MBA, CMBA,USFN, REOMAC, CFSPA, NPPC, NVPC, CEOA, CACEO and Edu-Code (AACE)

  3. Today's Agenda • Short History of Lending in America • Cause of the Current Crisis • History of VPR’s in America • Evaluating the Problem • Responding to the Problem • Enforcement of the Remedy • Questions • Campfire Songs and Scary Stories

  4. Short History of Lending in AmericaCause of the Current Crisis

  5. What Causes a Foreclosure? • As long as there have been mortgages there have been foreclosures • Historically there were three main causes 1. Loss of Employment 2. Illness 3. Divorce • All of which resulted in an inability to make payments • Primary cause today? 1. Inability to make payments

  6. Short History of Mortgage Lending in America • Housing (single family) was not considered a “financial investment” until the late 1970’s • Previous to that time SFR’s deteriorated faster then they appreciated • They were a good “personal investment” • 1970 = 20% down – 3 to 5 years on current job – payment could not exceed 25% of net monthly income • FHA / VA loans were only “creative options” • 2000 = 0% down (or less i.e.: 120% loan to value) “stated income” – payment could be as high as 60% of net monthly “stated income”

  7. CURRENT CAUSESUPPLY AND DEMAND • Lending practices created an artificial demand (Pulsen Penn Lending) • Creative/Exotic Financing “qualified” unqualified buyers • Uninformed “qualified” buyers entered into high risk / low initial payment loans (ARM – Neg-Am – Interest only – Balloon) • Developers proposed projects to fill demand • Cities approved new developments to fill demand • Builders rushed to build to fill demand • Mortgage brokers and real estate agents . . .

  8. History of VPR’s in AmericaEvaluating the Problem

  9. History of VPR’s in America • Not new • Primarily in the Northeast “Rustbelt” • Required reuse plan • Progressive fines for continued vacancy/abandonment • 2007 City of Chula Vista CA • 200+ cities in 2008 • 800+ cities currently

  10. 3rd Mo CavDis

  11. RESULTS OF FORECLOSURES • Abandoned residential properties • Visual blight • Attractive nuisances • Neighborhood destabilization • Reduction in home values • Less property tax $ collected • Decreased “marketability” • Increased calls for service • More abandoned residential properties . . .

  12. What are some of the signs of a distressed/abandoned property? • Overgrown or dead vegetation • Unmaintained pools, spas and ponds • Buildup of flyers, notices, newspapers and mail • Trash, debris, junk and discarded personal items • Accessible rear yards • Unsecured structures • These could all be present at an occupied property • NO ONE TO REPORT CRIMES, MAKE CORRECTIONS OR HOLD ACCOUNTABLE

  13. EVALUATION Do you need a new ordinance? • Overgrown or dead vegetation • Unmaintained pools, spas and ponds • Buildup of flyers, notices, newspapers and mail • Trash, debris, junk and discarded personal items • Accessible rear yards • Unsecured structures • If you have existing ordinances that cover these, then you don’t necessarily need another one to cover them again. • But there are issues that may not be covered in your code that may require you draft a new ordinance.

  14. EVALUATION Do you need a new ordinance? • Are you a judicial or non-judicial foreclosure state? • What is the average time for completion of a foreclosure? • Does your code identify the lender as a responsible party in PRE-FORECLOSURE ABANDONMENT? • What recourse does your jurisdiction have for remediation of vacant/abandoned properties?

  15. 5 Reasons Lenders Won’t Take Action in Pre-sale • Hope the mortgagor remedies the default • Hope the property will sell prior to Trustee’s Sale • Hope some other entity will buy at Trustees’ Sale • Hope they can sell/transfer the loan to another beneficiary • They “. . . can’t take any action while it is in pre-sale . . .”

  16. “MORTGAGEE IN POSSESSION” • Any action taken on a pre-sale property, including local registration, will trigger mortgagee in possession • “Filing a local registration, securing and maintaining the asset in accordance with your contract DOES NOT trigger mortgagee in possession.” Ronald Chemek, esq., Reimer, Lorber & Arowitz • “Our mortgage documents give us the right to remedy these issues to preserve our collateral.” Jill Rein, esq., Pierce & Associates

  17. The Lending Industry’s Dirty Little Secret Mortgage ABANDONMENT AND WASTE CLAUSE

  18. ABANDONMENT AND WASTE CLAUSE

  19. CAN Register and Post Secure against Vandalism Theft Trespass Maintain against Devaluation Deterioration Trespass CAN’T Discard personal property Deny access Rent Sell or offer for sale Abandonment and Waste Clausecans and cant’s

  20. Responding to the ProblemEnforcement of the Remedy

  21. COMPLIANCE IS THE GOAL

  22. COMPLIANCE IS THE GOAL

  23. COMPLIANCE IS THE GOAL • There are only two types of compliance. • Voluntary • Enforced

  24. ENFORCEMENTOPTIONS • Administrative Citations • Inspect Via Warrants • Cease & Desist Orders • Post Dangerous Building • Post Do Not Occupy • Vacate/Relocate • Board and Secure • Notice to StateTax Board • Recordations • Lien Foreclosure • Land Bank • Utility Disconnects • Civil Penalties/Daily Fines • Abate Summarily • Abate Via Court Order • Public Nuisance Abatements • Demolitions • Receiverships • Unfair Business Practices Suits • Injunctions • Criminal Prosecution • Daily Fines A FULL COST RECOVERY COMPONENT SHOULD APPLY TO ALL CASES/OPTIONS COMPLIANCE IS THE GOAL

  25. Say what you Mean. Mean what you say. Do You Need a “New” Ordinance? • Use THEIR language and terminology • Detailed definitions • Be specific

  26. CAUTIONS • ALWAYS perform due diligence • ALWAYS provide due process • Only as good as willingness and ability to enforce. • Don’t have the method AND the means? Don’t bother. • Lenders will take the path of least resistance. Tran$lation? Lea$texpen$e.

  27. “WHAT WORKS, WORKS. WHAT DOESN’T WORK, DOESN’T WORK. WORKING HARD AT SOMETHING THAT DOESN’T WORK . . . WON’T MAKE IT WORK.” John W. Alston

  28. QUESTIONS?

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