Banks Foreclose, then Abandon Ownership?? Originally Published 13 Jul 09 – got lost in the ether somewhere…

Please read the blog from John Mulkey below: I see opportunity here. Since every person and business in this great Country is rethinking and learning new / innovative methods of personal and business practices, one wonders how we (everyone BUT the Bankers) can legally and quickly wrest these properties away from languishing in the abandoned state.

The longer these homes are empty, the deeper a community destabilizes. The negative social and emotional impact to the remaining neighbors is clear, but have we considered how this experience is translated through the eyes and soul of a child?

The logical answer is for a City or GSE to take possession and convert to low income or assisted style housing. At least that is the old paradigm. Not certain that this would be economically feasible, even in Denver, where we are recovering nicely, but still have over a $100M shortfall in our City budget.

However, like the 1960’s style of Urban “Renewal”, I feel the methods of the GSE’s and Low Income Service Providers need (desperately) to change their business models – or perish. We are smarter and faster now. Business Plans need to change.

It’s not the “poor” that need help these days – it’s more like 98% of us! Could the States, Cities, etc. devise a method of taking possession of these abandoned properties and charging Churches and Neighborhood Organizations with the responsibility of rehabilitating then leasing these houses?

There are other ideas that – at a grass roots level – make a lot of sense. Most of us are on a tight personal budget now also, but I can afford time and a few dollars to help keep my community stable.

I live in a neighborhood of about 1400 houses. I think that, somehow, we could each afford $10 each per year. Place that in a fund to manage a few abandoned properties that the City grants us (The RNO) ownership to and we have the means to lease and maintain the properties to some of our neighbors who lost their homes to foreclosure. Keep their kids in the same school and keep the community more intact.

This idea – in its’ simplest form, can provide cash flow to the RNO or Church who becomes the landlord and can provide a few jobs (property management and maintenance) in the community. It will also place revenue in the local banks. As the neighborhood stabilizes and people are able to purchase homes, these properties can be sold off or continued to be used as a locally managed asset for the Church or RNO.

Spread the work; spread the wealth again, this time from the bottom up. We are greener and smarter that a generation ago. We have it in us to rebuild this great Country – one neighbor and one home at a time!

There’s always the opportunity to reactivate the Homestead laws…

Food for thought – any other creative ideas out there?

Penelope Zeller, Denver Colorado

Via <a

This article from John Mulkey came from the Active Rain site:
John Mulkey, Housing Guru

In an article today in the Milwaukee Journal Sentinel, it was reported that it’s becoming commonplace for lenders to refuse to take title to some properties following foreclosure. Why would a bank bother to foreclose and then abandon the property? It’s simple economics. Many of the homes just aren’t worth the bank’s efforts. But then, why would they foreclose? And who ultimately owns such properties? The answers are often as confusing an illogical as the creation of the subprime collapse that precipitated the problem.

What’s happening is a crime—perhaps not legally, but figuratively. Sometimes it’s a crime against the very people who have already suffered the most; and other times it’s a crime against neighborhoods trying to recover from issues of high crime and drug dealing. In the words of Catherine Doyle, attorney with the Milwaukee Legal Aid Society, “This is just the meanest and nastiest thing (lenders) could do. Even more profound is the terrible damage to the community.”

Abandoned homes become a blight on neighborhoods, havens for drug and criminal activity, and create fire and safety hazards. No longer sources of tax revenue, such homes are a drain on struggling cities resources, and ultimately cost taxpayers thousands more when condemned and bulldozed.

The procedure, known in the trade as “walkaways,” is a growing problem, especially for cities, where most are pressed for revenue. The mortgages on these homes, the great majority of which are subprime, were often made by now-defunct mortgage brokers, and are being foreclosed upon by loan servicers on behalf of investor groups often thousands of miles away. And, unfortunately, there appears to be no solution to the problem.

Have banks lost their hearts, or is it they never had one? The image of the friendly neighborhood banker was perhaps always a utopian vision; but what they’re doing is egregious on a monumental scale. Throwing people out of their homes, only to have those homes bulldozed later, is not only inhumane, it’s sheer stupidity. Once the owner is forced out, the home falls in to disrepair, may be vandalized, and everyone loses. And, the irony is; when the bank walks away, the original owner is still on the hook for taxes, boarding-up and clean-up fees that can run into the thousands of dollars. It’s a game of no winners.

Tips on buying, selling, building, remodeling, and the latest trends in housing: The Housing Guru

John Mulkey, Housing Guru (TheHousingGuru.com)
Mon, 13 Jul 2009 17:12:32 -0500

http://activerain.com/blogs/pzeller

http://activerain.com/blogsview/1152268/punishing-foreclosure-victims-some-banks-take-one-last-shot

Punishing Foreclosure Victims–Some Banks Take One Last Shot

Yes, it has been quite a bit of time since I blogged about the Post Foreclosure Program. In a nutshell, here’s a one year update:

Denver At-Large City Councilman Doug Linkhart liked the PFP and supported a test launch in some Denver Neighobrhoods. Denver ran out of money and could not fund the effort. In addition, it seems that EVERYONE in the City offices are focused on the fisrt zoning code update since 1956. Like that’s all important….

Non-Profits ran out of money and began to lay off staff and even shut down so interest from that quarter waned too.

I ran out of funds for the project. So I went to work to avoid becoming a foreclosed household.

I Consult in business development / liquidation and one of the industries I serve is the Realty Trade. I continued to talk about the Post Foreclosure Program idea to anyone who would listen and lol - what do you think happened?!

A local Real Estate Investor hired me to train him how to be “that kind of landlord that the PFP talks about.” We are having a blast placing families in his rental houses and his social equity is building daily. This modest and quiet gentleman believes the future of his small business includes socially responsible investing and landlording.

By invitation, I provided a PFP presentation to Dr. Pamela Wridt’s CPD calss at Univ. Colorado, Denver. The premise was to stimulate conversation about how Zoning and Planning professionals can use their trade to potentially shield against future foreclosure and economic downturns in real property. One item that came up was implementing Zoning language that encouraged Accessory Dwelling Units on single family zoned lots. (I’d be interested in your ideas.)

So, the mountain is moving – just one pebble at a time. Gotta love that grass roots stuff.

28 December 2008

In July of 2008, President Bush signed in the Housing Economic Recovery Act.  A few billion in dollars have been allocated and distributed to communities across the Nation.  Colorado received about $53M and of that, $6M was allocated to Denver. (More funds have been requested.)

In Denver, the $6 Million in allotted HERA Funds are greatly appreciated.  It appears that Denver will be able to buy and rehabilitate approximately 175 houses with this money in the coming months.  However, Denver is projected to experience about 13,000 NED filings in 2008 – at a minimum municipal cost of $7,000 per property. What are the Municipal Costs in in Adams, Arapahoe, Aurora, or your County?

Suppose a County could spend about $750,000 to save $14 Million in Municipal Costs in an 18 month window?  This represents using the PFP to activate 2,000 of these 12,000 foreclosures in Denver that we will see in 2008. By using the PFP, I believe monies could be applied much more effectively because we place the dollars – a tiny bit at a time – precisely where it can do the most good.

The 25 year PFP is a simple, inexpensive and powerful program designed to stand alone at a neighborhood level or be modified to work in conjunction with other Community Stabilization programs.  At the core, The PFP will:

• Service the foreclosed family in a fast, respectful manner assisting then to move, with their belongings, to a rental house in the same neighborhood, keeping the children in the same school.
• Stabilize the neighborhood by eliminating the down-time on empty houses.
• Utilize small investor and private funding to rebuild our neighborhoods from the ground up.
• Allow the family to stay in one home, as tenants, for the 3 – 5 years it takes to repair credit.
• Convert high rental neighborhoods to high owner occupant neighborhoods in 5 – 9 years.
• Goal:  Reduce (by at least 75%) municipal costs associated with foreclosures in 3 – 5 years.
• Build in economic protection to the homeowner in the low-middle income neighborhoods to avoid another foreclosure fiasco in the future.
• Engages any and all Community Members, Small Investors, Churches, Retailers, RNO’s, and local Government Offices, such as City Council.

The simple fact is that America cannot possibly throw enough money at the Real Estate failures to really make a positive impact in the shortest possible time frame, unless, among other considerations,  we rethink how we stabilize our tax base.

The old paradigm of Urban Renewal will not work at this time in our History.  Due to changing climate, our awareness of the environmental, and personal costs of the automobile, low to middle income families must remain in or near major employment centers with access to public transportation.  Further, with the lack of health care, coupled with less available funds in pensions and retirement protection to the working class, the very backbone of our Country needs this assistance.  When they are secure, America thrives.

I believe the Post Foreclosure Program can easily accomplish stabilizing America one Neighborhood at a time. 

Now is the time to take this idea and make if fruitful. I need help to finish the details of the Plan and activate the PFP on a County by County basis across the Nation.  Will you consider helping me launch this simple little idea?  This is my official call for volunteers.

Welcome to my world!

I am launching this Blog to offer a forum for positive and proactive solutions to our current foreclosure problems in the United States.

Losing a home to foreclosure – no matter what the reason – is devastating.  Currently there are no effective programs in play to assist the family that has lost their home to foreclosure.  I predict that we will also see a second round of foreclosures continuing this downward spiral in many of the hardest hit communities across the nation.

Here are some basic facts -

•  70% (ish) of the families evicted in foreclosure are gainfully employed.
• These employed families do not qualify for Section 8 housing or other assistance programs.
• No local or state agency is set up to address the housing needs of these families
• They can afford a mortgage equivalent but not a double / triple reset, so they lose their house.
• Their credit is trash for the next 3 – 5 years
• Most have family pets
• They cannot get into apartment complexes - rules are: no pets, no smoking, no kids and most importantly, no bad credit.
• Houses are the logical place for these families
• They need 3 – 5 years to repair credit so cannot be transient.
• Get their furniture and pets moved with them and they are likely not to move each time the lease is up.
• Keep them in the same school district and they will really stay put – for the sake of their kids .  

At this time in history, most single family (house) investors / landlords are new to the Real Estate game. 

• Many new  real estate investors are buying houses with a buy / hold business plan for 3 – 5 years, with the intent to sell for profit at that time.
• Some are so inexperienced in property rehabilitation they are losing the home to foreclosure before the property can be rented or sold.
• The new investors are not as savvy about market conditions and are purchasing in neighborhoods that will (realistically) take more than a decade to recover in value if no program is in place to stabilize the community.
• The huge increase in investor activity in the hardest hit value neighborhoods are transforming these communities to tenant occupied rather than owner occupied.
• “Rental” communities usually take longer to increase in value and quality
• The landlord may not realize a profit - other than his monthly cash flow – when his plan dictates selling the property.

The result is a second wave of foreclosures and / or landlords who become embittered (the new slumlord) as they realize their dreams of profit and time were optimistic.

As you can see the potential for further destabilization of Communities could be a reality in the near future.

I have worked on developing a Post Foreclosure Program -  a whole-kife grass roots solution-  and hope to stimulate a movement across the Nation to take back the middle class American Dream of secure home ownership.

In a real sense, I have created a new product, one with potential to rehabilitate and create sustainability in communities without pushing out the low to middle income families to “gentrify” the neighborhood. (That’s Phase Three of the PFP). 

I believe rebuilding our neighborhoods and re-empowering the low to middle income families with secure home ownership can be accomplished in relatively short order at a grass roots level and up.  This translates to less cost for the Government and for the Banking Industries.

Feel free to add your two cents worth.

Best Wishes,

Penelope Zeller

Real Estate and Business Development

Denver