• Abandoned (meaning any property that is vacant) and/or properties where foreclosure has been initiated must be registered within 7 days.
  • Appears to indicate that pre-sale properties must be registered and that servicers would be required to register occupied properties.
  • Wording in the ordinance contradicts the industry's definition of "owner" as opposed to "servicer."
  • Industry is looking for the investors to provide guidance and requirements regarding the registration of pre-sale properties.
• Registrations must be renewed by January 1st of each year.
• Registering a vacant property late in the calendar year could mean owing renewal registration fees 60 or 90 days after the initial registration payments are made.
• The ordinance lists an annual registration fee of $100.00. 
  • Servicers will request guidance from investors to confirm whether the registration fees are reimbursable.
  • Servicers are also considering whether to add the registration fees on to the UPB if the mortgagor attempts to bring the loan current.
• Once the property is re-occupied or sold, the seller must provide proof of sale or written notice of occupancy to the Inspection Services Department. 
  • This does not differentiate between pre-sale and post-sale on a re-occupancy, and there is no formal de-registration process.
  • Servicers are concerned that this may lead to occupancy inspection requests to establish proof of re-occupancy.
  • Occupancy inspections could lead to interior violations or other additional code upgrade requirements.
• Properties must be maintained in accordance with applicable sanitary codes, building codes, and local regulations. 
  • This language is too broad, and it could potentially increase the requirements for (and volume of) violations.
  • There are concerns over the extent to which the City will require code upgrades and other cosmetic repairs. It was suggested that perhaps these code requirements will act as escalation remedies to force the industry's "bad actors" to take action.
• The Inspectional Services Department “shall have the authority and duty to inspect properties” for compliance and to issue citations for any violations. 
  • The inclusion of the word "duty" implies a requirement to perform the inspections. However, servicers cannot legally provide access during pre-sale. 
  • There is also a concern that allowing interior inspections would lead to additional code requirements not related to health and safety issues.
• The property must have a sign displayed that contains the name, address, and 24-hour contact number of the local (within 20 miles) property management company. This must be visible from the street. 
  • This is problematic because such a sign advertises vacancy and invites vandalism.
  • There are concerns regarding how to meet this requirement in gated communities and for multi-unit structures.
  • Currently, many lenders are listing the local broker or agent as the point of contact.
• Failure to register, maintain, or properly post the property may lead to fines of $300.00/month for each occurrence. Violations of this ordinance shall be treated as a strict liability offense, regardless of intent.
• It is believed that “each occurrence” refers to each visit to a property by a city inspector, which could result in significant financial penalties.

Other Key Discussion Points:

• The ordinance may include both mortgagees and trustees as "owners."
• Several servicers (Wells Fargo, Chase, ) stated they are registering properties pre-sale in Boston and other cities (including Palmdale, Chula Vista, St. Paul, and Grand Rapids).  The primary reason for pre-sale registration would be the anticipated notification (early warning) of any issues that may arise, reducing the possibility of an unknown condemnation or demolition.
• The ordinance does not address properties where the mortgagor is in bankruptcy.  
• The ordinance does not discuss whether condo associations and HOAs are exempt from this ordinance. If so, this could be construed as preferential treatment.
• The Home Rule allows parts of a state to be given greater self-governing powers to meet their specific needs in their jurisdiction.  The question was raised if the Home Rule can be invoked if the industry is able to address the registration ordinances on a state/national level.

• Reaching out to the MBA for assistance
• Forming a MBA committee to address VPR on a state/national level 
• Getting commitments from servicers to be active participant in the committee
• Developing a "local resource list" of industry representatives who can communicate with their local government officials

Follow up:

Robert Klein met with Senior Director, Government Affairs Vicki Vidal, Christopher Oswald, Director of State Legislative Affairs and Shelton Roulhac, Puplic Policy Specialist Government Affairs, to establish the committee and review how to address this issue.
 
* Update: A Safeguard key staff member met Evelyn Friedman, the City of Boston's Chief and Director of the Dept. of Neighborhood Development ( click here ). During the discussion, there was a brief review of some of the concerns, specifically:

•  the 20-mile requirement (including the benefits of allowing national field services entities to be listed) and 
• The pre-sale concerns.