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Robert
Ongoing issues exist with city
notices/violations not going to the correct
servicer/location/person. This is even more critical with numerous
sales of servicing and mortgage company acquisitions and mergers.
Correct and timely filing of assignments is extremely important.
Once a property is in the Fast Track system, it is difficult to get
it out and it is up to the servicer/owner to convince the court
that the property will be repaired. The Fast Track process can be
slowed but usually not stopped altogether.
The key to keeping properties
out of the Program is to inspect them frequently and ensure that
they are and remain secured per the Chicago Ordinance. Some
servicers are opting to inspect weekly, regardless of investor
reimbursement, in order to ensure that their properties remain
secure and any problems are timely addressed.
Questions were raised to HUD as
to whether they would consider reimbursement for the additional
property inspections. Leslie Bromer from HUD stated that they are
looking at some "variations" in the inspection schedule. She
indicated that they were trying to make some changes, similar to
those that were done for winterization states. The considerations
are in front of HUD senior management at this time. In the
meantime, the guidelines in HUD ML 07-31 and 00-26 continue to
apply as to inspection reimbursement. The M&M contractors
should be responding to servicer overallowable requests in a timely
manner. If the M&M contractors are not doing so, the issue
should be escalated to the Director of REO at the Atlanta Home
Ownership Counseling Center.
There
is a shortened redemption period in Illinois if the property is
vacant and abandoned. In these cases, the redemption period can be
shorted by up to three months. An Affidavit of Abandonment is
needed to be presented in Court. Check with your local counsel for
further advice.
The
key to the preventing a property from entering the Fast Track
Program is ensuring that the property is secure and free of debris
or potential city citations at all times. The recommendation was
made that the weekly inspections, a contractor be sent rather than
an inspector as the contractor is able to secure the property
immediately if necessary. Due to over-allowable approval delays,
some servicers have moved towards providing pre-approval up to a
certain amount for immediate securing with complete photo
documentation of the property condition and all work completed.
Under the Watchman Ordinance a
property does not have to be vacant to be targeted by the city.
With this particular program, the city is going after "problem"
properties which appear to be being used for drug and or gang
activity. While the city does not appear to be currently enforcing
the Watchman Ordinance, it applies city-wide and can be enforced at
any time.
*** Please note, the following bulletin was
just submitted to the USFN listserv by Denis Pierce of Pierce &
Associates.
"new info- the Chgo police are ticketing
properties and they are citing failure to secure and failure to
post watchman. This is new- we have about 5 in the office within
the past week- Denis"
This past summer the city
enacted a registration process for vacant properties. Some
servicers are electing to register their vacant properties and some
are not. It should be understood, though, that by taking legal
action to stop a demolition by the city, a servicer must then
register the property. If a servicer chooses to register their
properties, the city of Chicago should be notified when the
property is sold or conveyed. The issue of whether the registration
fee, if paid by the servicer, can be collected from the
mortgagor(s) upon reinstatement was addressed and it was the
opinion of Denis Pierce, Pierce & Associates, that it could be
collected.
The
vacant property registration ordinance requires that an owner
maintain liability insurance, in an amount not less than
$300,000.00. One of the servicers in attendance explained the
difficulty in obtaining such insurance. Their force placed carrier
had to create a policy especially for this purpose.
The issue of HUD reimbursement on
reboardings to comply with the new city of Chicago vacant property
ruling was addressed. Leslie Bromer indicated that the servicers
should comply with all city ordinances.
Several other cities are either
passing new vacant property ordinances or are beginning to enforce
older ordinances. There was also discussion regarding the continued
attention on vacant and blighted properties through out the country
including Buffalo, Philadelphia, St. Paul, Los Angeles and New
York. It is believed that this will continue to spread to other
cities as they weigh the success of these programs.
In situations where there appears
to be some disagreement between servicers and the M&M
contractors over mortgagee and mortgagor neglect, Leslie Bromer
asked that those issues first be raised with the appropriate HOC
center. The same process should be followed when there is a
conflict between the HUD guidelines and directions that are being
given by the M&M contractor.
Work performed on a property
during either the redemption or ratification process should be
limited to that which is necessary to preserve and protect the
property.
Both HUD and VA have issued directives on the
usage of shortened redemption/ratification periods in certain
states.
The issue of increased lawsuits
resulting from property securing, especially those completed prior
to the foreclosure sale, was raised. Work completed prior to the
foreclosure sale should be limited to that which is necessary to
protect a property from sustaining damage.
There is also the ongoing difficulty of
distinguishing between debris and personal property. No conclusion
was reached.
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