Thursday, August 9, 2012

Banksters' Failure To Complete F'closure Process On Violation-Plagued Homes Leaves Some Cleveland Homeowners Holding The Bag, Facing Criminal Charges

In Cleveland, Ohio, The Plain Dealer reports:

  • Renetta Atterberry thought she had lost her East 102nd Street house. So she was shocked to learn in January -- five years after her mortgage company filed for foreclosure -- that it was still in her name.

    Worse, the long-vacant rental home had been vandalized and she faced a raft of housing code violations. Since then, she has been saddled with debts of about $12,000 to pay for demolition and back taxes.

    "I thought I had nothing else to do with that home," said Atterberry. "I was so embarrassed and humiliated by this."

    Her mortgage company didn't buy the house and never took it to sheriff's sale to see if somebody else would, leaving Atterberry the legal owner, responsible for upkeep and taxes.

    These so-called "bank walkaways" are another troubling development in the foreclosure crisis, particularly in cities like Cleveland with weaker housing markets, say housing advocates and government officials.

    Lenders or mortgage companies decide they don't want homes they have already foreclosed on, sometimes because the value has plummeted or they believe the homes could become costly liabilities if they are socked with housing code violations.

    But without that sale, the property can languish abandoned and ripe for vandalism. As liens and liabilities mount -- creating a so-called "toxic title" -- it becomes even harder to transfer the property. Neighborhoods and local governments are left to deal with the mess.
  • Properties left in 'legal limbo'

    Joseph Schilling, associate director of the Metropolitan Institute at Virginia Tech and an expert on abandoned property, said the issue of bank walkaways is increasing. Lenders may decide that given low prices and their mounting inventory of foreclosed property, it makes sense to walk away.

    "But as a result, it leaves the property in this type of legal limbo and it leaves the community and local government really holding the bag," Schilling said.

    The problem has gotten the attention of government officials who are trying to fill a void in Ohio law and force companies that foreclose on property to act. State Rep. Dennis Murray of Sandusky is drafting a bill he hopes to introduce in the next two months that would require lenders or mortgage service companies to take foreclosed properties to sheriff sale within a certain time -- or see their mortgage lien erased.

    The lender wouldn't be required to buy the property -- only to take it to sale. More time could be given to lenders working to keep people in their homes by restructuring the mortgage.
  • 'I see shocked people every single week'

    Some of the fallout that results when properties languish vacant and abandoned shows up in Cleveland Housing Judge Raymond Pianka's courtroom. "I see shocked people every single week," Pianka said. "They thought the burden was lifted because they filed bankruptcy or because somebody somewhere told them they're no longer responsible, and then they're pulled back in facing criminal code violations."

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