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            Mitigating Community Impacts
               Code Enforcement Perspectives

Edward Cunningham, CBO
Division Manager, Property Maintenance Code Enforcement
City of Cincinnati, Ohio
•   Identifying Foreclosures
•   Foreclosure Cycle
•   Challenges in Code Enforcement
•   Code Enforcement Remedies
•   Other Legal Remedies
A local Lender response….

                  Takes deed in lieu
                  Lender encourages
                  tenants to remain
                  Restores utilities
                  Hires Contractor to
                  make repairs
                  Lists the building

    Property in Trouble
A National Bank Response…
                  File Foreclosure
                  Tenants abandoned,
                  lose deposit,no
                  water/utilities etc., City
                  2- sales no bidders
                  Refuse to board up
                  Refuse to take deed
                  Abandoned for 2 years
                  Walks Away
   The work of code enforcement
• Use of inspection and enforcement
  processes to compel owners of substandard
  properties to correct code violations.
• Securitization of mortgages “muddies the
  ownership waters”
• Government not prepared for enforcement
  against securitization
• Mortgagees need a statutory standard of
  behavior for protecting neighborhoods from
  the ravages of foreclosure
     A performance standard…
• Prevent foreclosures; lenders lose avg. 30k on
  each filing
• Keep the property occupied until a responsible
  owner takes over
• Require mortgagees to assume the responsibility
  of traditional owner upon judgment of foreclosure
• Require code violations to be corrected prior to
  final confirmation of sale
• Require mortgagee to appoint a receiver for multi-
  family building upon initial filing of foreclosure.
    Identifying Foreclosures
• Data often difficult to locate
• Changes rapidly
• Clerk of Courts – Foreclosure Filings
• Lender- Real Estate Owned (REO),
  From Land Records
• Citizen Complaints
Foreclosure Map
           Foreclosure Cycle
• An ounce of foreclosure prevention is worth a
  Pound of Neighborhood Cure
• Owners receives notice of foreclosure, moves out.
• Building sits vacant for approx. 6 to 10 months
  months during foreclosure proceedings
• Building is vandalized, copper pipes removed,
  architectural antiques removed, windows broken
• An attractive nuisance and harborage of crime.
• Building sold at foreclosure sale, many taken
  back by lenders
• Average time to sell REO over the last 5 years is
  approximately 10 months. (Based on Local sample)
Code Enforcement Challenges
1. Lenders are often out of town, difficult to
  contact, and use various servicers
2. Assigning responsible party during
  foreclosure proceedings
3. Rapid ownership changes result in a “shell
  game” for code inspectors trying to issue and
  enforce violation notices.
4. Buyers of REO properties are often out of
  town owner “investors” or “flippers.”
5. Minimizing damage during foreclosure
6. High numbers of vacant properties
1. Lenders are often out of town, difficult
   to contact, and use various servicers
• Who in the securitized mortgage structure is
  motivated to improve foreclosed property?
• Establish relationships with servicers and
  lenders REO Departments if possible
• File Criminal Charges- Trial in Absentia?
• Civil- Bring Nuisance or Receivership action
• Summary Abatement- Demolition and
• Code Provisions- Define “Owner,” “Person
  responsible for the work,” “Person in
  Control,””Mortgagee in possession.”
2. Assigning responsible party during
foreclosure proceedings
• Mortgagor, Mortgagee, Trustee,
  Servicer, Property Preservation
  Contractor etc.
• “Person in Control”
• “Legal Title Holder”
• “Walk Aways” & “Toxic Title”
• Ensure code assigns responsibility to
  mortgagee appropriately.
3. Rapid ownership changes result in a “shell
game” for code inspectors trying to issue and
enforce violations notices.
• Vacant Building Licensing with escalating fees
  and fees as a lien provision
• File charges after flipped for chronic offenders
• File a receivership or nuisance abatement and
  injunction to prevent sale of property until
• New owner letter
• Joint and severable liability for demolition costs
• Require violations be corrected before sale is
4. Buyers of REO properties are often out
 of town owner “investors” or “flippers.”
• “Here comes the new owner, same as
  the old owner“
• Record affidavit of fact against the title
  indicating orders pending
• Judgment liens for outstanding fees and
• Condemnation and demolition
• Administrative Stay of demolition
  requiring bond = to demolition cost
5. Minimizing damage during foreclosure
• File one Civil suit alleging nuisances for many
  buildings owned or controlled by mortgagee
• Allow police to arrest under vacant building
  orders & increase directed patrol
• Scrap Metal dealer enforcement
• Require monthly inspections by mortgagee and
  that lenders protect collateral
• Keep the buildings occupied through
  foreclosure & sale by leasing to mortgagor
• Lender posts bond at foreclosure to cover
  municipal costs
• Moratorium on foreclosures
Police - Notice
  6. High numbers of vacant properties
• Create an inspection team devoted
  solely to vacant building enforcement
• Evaluate and categorize
• Safety and Blight
• Obsolescence
• Historic / Intrinsic / Streetscape value
• Feasibility for Rehab
• Owner compliance potential
• The current system of national banking
  and securitization of mortgages has
  reduced homes and neighborhood fabric
  to numbers on a balance sheet.
• New laws are needed to ensure
  mortgagees filing foreclosures take action
  to mitigate damage to neighborhoods.
• Foreclosure and sale of properties must
  not be allowed to perpetuate the cycle of
  disinvestment and blight

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