Vacant property ordinance considered in Chicago

Chicago City Council is proposing an ordinance that would help clean up those vacant properties affected by foreclosure in the city.  We’ve all driven through neighborhoods only to see boarded up homes, graffiti, broken windows, and unkept lawns.  Bank of America, Wells Fargo, PNC and JP Morgan Chase helped develop the ordinance along with the city.

What is proposed is to have the banks better maintain these properties that are awaiting foreclosure or were left vacant because the bank took ownership after a foreclosure.  They would have to take responsibility for winterizing properties, putting up metal if the plywood was removed twice, and keeping stairs to the entry secure.  If it was found that they weren’t maintaining the properties correctly according to the ordinance, they could be fined each time.

They’re hoping to make this ordinance take effect statewide by proposing it before the State legislature.  For both the State and the banks, they’re also hoping to lower the amount of time it takes a property to go through foreclosure.  Cook County is averaging about two years currently, and they’re hoping to get that down to six months tops.

According to this Chicago Tribune article, “The mayor wanted to be sure we were able to uphold the important maintenance requirements in Ald. Dowell’s ordinance, so we brought the banks to the table to work toward a solution,” said David Spielfogel, chief of policy and strategic planning for the mayor’s office. “In addition to the compromise ordinance, we are working toward a solution in Springfield that will ensure regulatory certainty for municipalities and banks.”

And if everything passes as everyone hopes, the ordinance should take effect by the end of this year.

What are your thoughts?  Good or bad?  I actually like that the banks helped to develop it, especially considering they’re the ones that would be fined if they don’t follow through.  It really holds them responsible and keeps the city from looking like an awful mess.  Leave me a comment or visit me online.

Foreclosures down, backlogs up

Well, I’ve got good news and bad news.  And the bad news can even be interpreted as good news for some.  Good news: foreclosure rates across the country are at a 3-year low, according to MSN Real Estate.  Bad news: Courts are so backlogged by the foreclosure filings that it’s taking a year or more for foreclosures to be processed on some homes.  And that can be good news for those underwater on their mortgages, as they can live in their home for even 2 years in some states without being evicted and without a mortgage payment.

RealtyTrac Senior Vice President Rick Sharga says that “This is really all part of the robo-signing paperwork issue.  Almost none of this is related to a decline in distressed properties. ”  It’s just that Courts can’t keep up with all the paperwork.  And Sharga is unsure whether we’ve reached our peak of foreclosures or more filings will occur once the banks and Courts start catching up.  Even new hirings aren’t helping the banks move the process along any quicker.  And that’s also bad news for buyers interested in foreclosure or bank-owned properties.  The waiting process can still take a while for someone to review all the paperwork.

I just mentioned how some homeowners can live in homes for 2 years prior to being evicted.  In some states, like New York and New Jersey, it’s taking the bank an average of 800 days to finalize a foreclosure once the process has started.  And now the government is going to charge lenders for handling foreclosures improperly.  They’ve also passed regulation requiring 14 mortgage servicers to hire more staff and have a single point of contact for a homeowner dealing with a foreclosure or loan modification.

Nevada leads the country with the highest foreclosure rate.  1 in every 35 homes has received a foreclosure filing.  Arizona and California round out the top 3.  And, unfortunately, Illinois also is included in the top 10, along with Colorado, Idaho, Utah, Georgia, Michigan, and Florida.

And analysts say it can take years for all these foreclosed homes to clear the market brining home values up again.  But it could take even longer because of the backlogs in the courts.  Fannie Mae and Freddie Mac even said they’re going to slowly trickle foreclosures into the market instead of releasing them all at once.  While this is beneficial to home values now, it just means it will take even longer for the housing market to stabilize.

What do you think?  Should banks be allowed to control when foreclosures hit the housing market?  Please leave me a comment or visit me online.

Courts could change future of foreclosures

A big decision by a Massachusetts court last week could change the way foreclosures  are viewed in this country.  Because of a lack  of signed paperwork, the Supreme Court in Massachusetts ruled that two banks couldn’t legally foreclose on homes.

Mortgage paperwork needs to be physically signed if title can properly be transferred  from one party  to another.  In the foreclosure process, the loan can get transferred numerous times before being sold to investors.  It’s very possible (as in this case) that paperwork misses getting signed from one transfer to another.

One of the justices stated in their ruling that the party that wants to foreclose most hold the mortgage at the time of sale to actually have the authority  to foreclose on the property.  This is the first ruling by a state high court regarding banks being able to foreclose without proper paperwork saying they hold the mortgage.  Since cases were filed in many other states around the country regarding this same issue, many were waiting to hear about what Massachusetts decided first.

And now it’s possible that the plaintiffs in this case own their home free and clear.  No more mortgage payments and no issues of foreclosure.  So what does this mean?  Make sure to find out if  all paperwork is in order before leaving your home.  You will definitely want to consult with an attorney to help you with this.  Keep all paperwork received from your lender in a file, as well as information about anyone you spoke to on the phone, the conversations you had, and dates and times.  This will be a paper trail for your benefit if an issue ever arises. 

I couldn’t agree more with the Supreme Court here.  Nobody should be allowed to take possession of your home unless they truly hold the loan.  It’s true that you technically aren’t the owner of a home unless you have a zero balance on your home.  But there needs to be paperwork in place regarding a transfer of title if it ever comes to that.

More of this decision can be found here. I can be reached via my Web site.