Tuesday, Oct 23, 2018
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Proposal to register foreclosures stirs debate

City law would target vacant, blighted houses


A proposal to require mortgage lenders to register properties in foreclosure with the City of Toledo attracted both praise and condemnation during a council hearing Wednesday.

Several councilmen and a local legal advocate expressed strong support for the proposed legislation, which aims to combat the problem of vacant and blighted housing in the city. But Bell administration officials doubted the effectiveness of the measure and said it could create more work for an already strained inspections department. City Realtors, meanwhile, said it could bog them down with red tape and fees, and hamper their ability to get properties resold.

If the law is approved, mortgage lenders would have to notify the city whenever a foreclosure action is filed. They also would have to inspect the property every month and inform the Department of Inspection if it is vacant. Lenders would need to provide contact information for the person in charge of maintaining the home.

The city would use the information to establish a foreclosure registry to keep track of the properties in question.

RELATED ARTICLE: Foreclosure affects fewer homes in Toledo area

Councilman Paula Hicks-Hudson, who presented the measure, said the registry would enable the city to keep better tabs on foreclosed properties and to hold mortgage-holders accountable for maintaining vacant homes. She said other cities have implemented similar laws with great success.

"What it provides us with is the name of somebody that we can point to and say, 'You've got to do something,'  " Ms. Hicks-Hudson said. "It's so that before we get to a rundown property we can say, 'You have a responsibility to keep this property up.' "

George Thomas, an attorney for Advocates for Basic Legal Equality in Toledo, said the proposed city law would enforce what the federal government has already asked mortgage lenders to do. Fannie Mae and Freddie Mac have issued guidelines to mortgage servicers asking them to inspect properties in foreclosure for vacancy, he said.

"We need to have our own local policy as to what happens with these properties," Mr. Thomas said. "It is critical that the city traces these foreclosed properties, that the city knows if the properties are vacant, and that the city have the ability to follow up with that."

But Deputy Mayor Tom Crothers said creating a foreclosure registry could just add more work for city employees without doing anything to solve the problem of vacant housing. He and some other council members questioned whether mortgage lenders can legally be asked to take care of properties they are foreclosing upon when they haven't taken title yet.

"You can come up with all of the lists you can think of, but that doesn't give us the wherewithal to actually extract performance on the part of the property owner," Mr. Crothers said. "The person who forecloses the property does not have to take title."

Representatives from the Realtor community said they feared the proposed policy would ultimately penalize them.

Megan Meyer-Foos, CEO of the Toledo Board of Realtors, said the registry and inspection requirements could create havoc for Realtors who list properties in foreclosure on behalf of out-of-state lenders.

The additional red tape and fees also could prompt lenders to walk away from the properties altogether, she said.

Under the proposal, lenders would pay $60 to register the property and an extra $10 fee every month.

Ms. Meyer-Foos also questioned the wisdom of establishing a registry of vacant homes, arguing it could serve as an invitation to people intent on stripping the property for valuables.

"We understand the importance of this ordinance," Ms. Meyer-Foos said. "We do not believe it is a solution to the problem."

Anna Mills, a Realtor in West Toledo, said requiring all foreclosed properties to be registered, even if they are not vacant or in bad condition, would be too onerous and expensive.

"A few extra fees do make a difference. They make a difference in the neighborhood where it matters," she said.

But Councilman Mike Craig said he supported the move to establish a registry.

"Everybody here has their home value affected by people who are irresponsible and won't take care of a property that they are obligated to by contract," he said. "We have to do something. We can't stand idly by and watch the property values in the City of Toledo be dragged down."

After the hearing, Ms. Hicks-Hudson said she plans to hold a meeting with people who would be affected by the law to further discuss concerns and come up with final legislation.

Contact Claudia Boyd-Barrett at: cbarrett@theblade.com or 419-724-6272.

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