VACANT PROPERTY REGISTRATIONS PROGRAMSDo YOU need one?

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 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)

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

Short History of Lending in AmericaCause of the Current Crisis

What Causes a Foreclosure?

As long as there have been mortgages there have been foreclosures

Historically there were three main causes1. Loss of Employment2. Illness3. Divorce

All of which resulted in an inability to make payments

Primary cause today?1. Inability to make payments

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”

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 . . .

History of VPR’s in America

Evaluating the Problem

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

3rd Mo Cav Dis

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 .

. .

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

propertyNO ONE TO REPORT CRIMES, MAKE CORRECTIONS OR HOLD

ACCOUNTABLE

EVALUATION Do you need a new ordinance?

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.

•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

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?

5 Reasons Lenders Won’t Take Action in Pre-sale

1. Hope the mortgagor remedies the default

2. Hope the property will sell prior to Trustee’s Sale

3. Hope some other entity will buy at Trustees’ Sale

4. Hope they can sell/transfer the loan to another beneficiary

5. They “. . . can’t take any action while it is in pre-sale . . .”

“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

The Lending Industry’sDirty Little Secret

MortgageABANDONMENT AND WASTE

CLAUSE

ABANDONMENT AND WASTE CLAUSE

Abandonment and Waste Clausecans and cant’s

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

Responding to the Problem

Enforcement of the Remedy

COMPLIANCE IS THE GOAL

In C om p lian ce

Th ose W h o W ill

W E O F F E R H E L P

Th ose W h o C an 't

D on 't K n ow

E n cou rag e

E d u ca te

D on 't C a re

N ot In C om p lian ce

Tw o Typ es o f P rop erties

COMPLIANCE IS THE GOAL

In C om p lian ce

Th ose W h o W ill

W E O F F E R H E L P

Th ose W h o C an 't

D on 't K n ow

Enforcem ent

E n cou rag e

E d u c ate

D on 't C are

N ot In C om p lian ce

Tw o Typ es o f P rop erties

COMPLIANCE IS THE GOAL

There are only two types of compliance.1. Voluntary2. Enforced

ENFORCEMENT OPTIONS

Administrative Citations Inspect Via Warrants Cease & Desist Orders Post Dangerous Building Post Do Not Occupy Vacate/Relocate Board and Secure Notice to State Tax 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

COMPLIANCE IS THE GOAL

A FULL COST RECOVERY COMPONENT SHOULD APPLY TO ALL CASES/OPTIONS

Say what you Mean. Mean what you say. Use THEIR language and

terminology Detailed definitions Be specific

Do You Need a “New” Ordinance?

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$lation? Lea$t expen$e.

“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

QUESTIONS?