More On The Abandoned Home Decimation Of Slavic Village

In Cleveland, Ohio, National Public Radio reports:

• In Cleveland's Slavic Village, a neighborhood on the southeast side of the city, "termites" have decimated a house once occupied by a couple. The intruders haven't chewed through the wood or even destroyed the carpets. These termites, as Cleveland City Councilman Tony Brancatelli calls them, are vandals who've stripped the recently foreclosed house of its fixtures, plumbing pipes, windows and wiring.

For more, see In Cleveland, Foreclosures Decimate Neighborhoods.

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Minneapolis Groups Sue Local House Flippers For Mortgage Fraud; Alleged Scam Involved 140 Homes, Most Vacant & In Foreclosure

In Minnesota, the Pioneer Press reports:

• Three north Minneapolis neighborhood groups, backed by the City of Minneapolis, are suing a Roseville company called TJ Waconia for mortgage fraud involving 140 homes, most of them now in foreclosure or abandoned. At a press conference today in north Minneapolis, Mayor R.T. Rybak said they are suing for unspecified damages, as well as to retake the houses themselves. There is no dollar amount on the damages to the city and neighborhoods in the lawsuit, which was filed in Hennepin County District Court, and it isn't clear how much money can be obtained from the company. The lawsuit doesn't name the lender who made many of the mortgages to straw buyers.

• Nonetheless, the lawsuit is the latest example of local governments swinging back at what they say are the villains in a foreclosure crisis that, for them, has become a community emergency. The cache of neglected and boarded up houses has blighted the area, dragging down neighboring property values, neighborhood leaders told reporters.

***

• The lawsuit names TJ Waconia LLC and various affiliates including TJ Holdings LLC, Total Title LLC, Absolute Appraisal LLC and CityWide Management LLC. Owners Thomas J. Balko, 37 of Rogers, and Jon E. Helgason, 44, of Chisago are also named. Balko was a licensed appraiser and Helgason a licensed real estate agent and broker, the lawsuit said.

• The lawsuit charges that between 2003 and 2005 Balko and Helgason systematically bought and flipped 140 houses in north Minneapolis, using inflating appraisals. Within a few months of buying, the men would flip the houses, selling them at significantly higher prices to buyers believed to be either straw buyers or investors affiliated with Balko and Helgason. The homes were then rented out to people, but the mortages left unpaid. [...] More than half of the 140 homes are in some stage of foreclosure, and nearly 110 are vacant, according to Mary Cullen Yeager, a partner at Faegre & Benson representing the plaintiffs.

***

• The groups are charging TJ Waconia with one count of violating a state private nuisance statute, four counts of violating the state Tenants Remedies Act by creating nuisance properties, one count of violating the state's Consumer Fraud Act and charges Balko and Helgason with two counts each of racketeering.

For more, see Minneapolis groups sue Roseville firm over foreclosures.

See also:

• Minneapolis Star Tribune: Minneapolis sues firm over mortgages: 'It's personal',
• Fox News 9: Minneapolis Files Lawsuit Against Firm Linked to North Side Foreclosures (City joins neighborhoods in suit against TJ Waconia),
• KARE-TV Channel 11: Minneapolis sues company over Northside foreclosures.

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St. Paul "To Turn The Screws On Lenders" For Blight Caused By Vacant Foreclosures

In St. Paul, Minnesota, the Pioneer Press reports:

• The city of St. Paul, grappling with a growing list of abandoned buildings now 1,700 homes long, is taking a swing at national lenders in a stepped-up effort to tackle the foreclosure crisis. A highlight of the city's game plan, announced Wednesday, is hiring a lawyer from the St. Paul-based Foreclosure Relief Law Project to advise on legal strategies to turn the screws on lenders such as Wells Fargo & Co., U.S. Bancorp and Deutsche Bank AG. The city said a small group of large lenders is responsible for many of the abandoned properties St. Paul is struggling with, neglecting the buildings and leaving them to deteriorate. "We want to be clear: If they don't come to the table, we're going to go after them," St. Paul Mayor Chris Coleman told reporters.

***

• St. Paul appears to be borrowing a page from the foreclosure playbook used by the cities of Cleveland and Buffalo, N.Y. Those cities have sued major lenders and servicers in recent months, accusing them of failing to take care of properties after foreclosure.

For more, see St. Paul goes after national lenders in effort to battle foreclosure blight.

See also:

• Minneapolis Star Tribune: St. Paul looks hard at fallout of foreclosure (The city announced strategies to get owners of foreclosed and vacant properties to take responsibility for them),
• KARE-TV Channel 11: St. Paul to get tough with lenders in foreclosure crisis (According to police, many vacant homes have been the target of arsonists. Thieves have been known to break in and take out copper piping and appliances. Vandals have broken in and used them as sites for parties where the home is left trashed and full of graffiti),
• Minnesota Public Radio: St. Paul threatens legal action against banks that own vacant houses.

Go here for posts on the approach taken by the City of Buffalo, NY towards foreclosing lenders and its vacant houses.

To view Buffalo's lawsuit against a host of lenders on account of the blight caused by the abandoned houses in foreclosure, see City of Buffalo v. ABN Amro Mortgage Group Inc., et al. (3.67 MB; available online courtesy of the law firm Skadden, Arps, Slate, Meagher & Flom LLP). If there's a problem with this link, email me at HomeEquityTheft@yahoo.com and I'll email it to you (please put "City of Buffalo v. ABN Amro" in the subject line).

Go here for posts on Cleveland's lawsuit against 21 investment banks involving neighborhoods blighted by vacant foreclosures.

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Four Abandoned Homes Torched In Four Hours In Slavic Village; City Official Blames Foreclosure Crisis

In Cleveland, Ohio, WKYC-TV Channel 3 reports:

• Four homes caught fire in four hours on Wednesday night. Now neighbors [...] are surrounded by boarded up homes and arson signs. [...] Two abandoned homes near her were set on fire. Flames spread to two other abandoned homes, all on the same block.

***

• What's going on in the neighborhood has caught the attention of people at the highest levels. Cleveland Councilman Anthony Brancatelli took contractors who work with the Federal Department of Housing and Urban Development on a tour of the [Slavic Village] neighborhood. He talked about how the fires were a direct result of the foreclosure crisis. "What happened is a number of predatory lenders came in and created a situation where these houses would get stripped and condemned," he said. "There are homes here that are mortgaged for 90-95 thousand dollars that are not worth 10 and 15 thousand dollars."

For more, see Fear grips Slavic Village neighborhood after arson fires (watch video) (read transcript).

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Increase In Abandoned Homes Raises Safety Concerns In Central Ohio

In Marion, Ohio, The Marion Star reports:

• With the economy slowing and foreclosure rates up, Ohio is seeing its fair share of abandoned homes and vacant properties. Marion isn't isolated from that trend and local authorities say it presents a potentially dangerous situation for safety forces and residents -- fires. "I see in driving around the community more and more empty houses," said Al Gruber, chief of the Marion City Fire Department, noting an increase in the number of fires within city limits that involve vacant properties.

***

• Gruber's concern is two fold -- vacant homes are not always structurally sound and vacant homes are not always vacant. "Kids play in them, animals seek shelter in them and even the homeless squat in them," he said. During the colder months, Gruber said fire departments traditionally see an increase in fires of vacant structures, likely started by homeless members of the community. Neighborhood youths using vacant structures as "club houses" proves even more problematic, Gruber said. "They're starting little fires in there and they think it's fun," he said. "It's just a worry. If we can keep them out of there, that's something we want."

For more, see Abandoned homes rising safety concern (Potential for problems grows as number of vacant houses increases).

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Flood Of Foreclosures, "For Sale" Signs Hitting Working Class Northeast Neighborhoods Hard

The extent to which the residents in Northeast working class neighborhoods are being hurt by foreclosures and the high level of housing inventory currently on the market is described in three recent articles on the state of affairs of neighborhoods in The Bronx (New York), Newark (New Jersey), and New Bedford (Massachusetts). For more, see:

• The New York Daily News: Foreclosures affect Bronx homeowners,
• The Newark Star Ledger: The mortgage crisis' block of despair,
• The Standard Times (New Bedford): Neighbors cope with blight of vacant houses.

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Congressional Hearings Begin On Blameless Victims Of Foreclosure Crisis

In Washington, D.C., The Wall Street Journal Blog reports:

• Rep. Dennis Kucinich began the first of two days of hearings to call attention to the “largely unrecognized … and totally blameless victim — neighborhoods.” The Ohio Democrat and former Cleveland mayor heard made the case that concerns about creating a moral hazard — or rewarding risky behavior — were countered by the fact that neighborhoods weren’t at fault for the impending foreclosure boom.

For more, see Kucinich: Neighborhoods Are Blameless ‘Victims’ in Subprime Crisis.

See also, The Talk Radio News Service: Foreclosure crisis is leaving neighborhoods in ruins.

"Chairman Dennis Kucinich (D-Ohio) said that “when foreclosure leads to vacant and abandoned properties, surrounding neighborhoods and local municipalities suffer significant consequences.” Kucinich said these include:

• falling neighborhood-wide property values,
• equity loss,
• decreased rental availability,
• lowered business rates for merchants,
• increased crime from arson and vandalism,
• increased building and demolition costs,
• increased legal expenses and reliance on governmental service programs, and
• loss of tax revenue.

Kucinich called the neighborhoods “totally blameless” victims of the crisis who “had nothing to do with the transactions that resulted in the subprime mortgage meltdown.”"

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Suspected Arson Renews Safety Concerns Among Cleveland Residents Over Abandoned Building Hazards

In Cleveland, Ohio, The Cleveland Plain Dealer reports:

• Arson is suspected in a fire that damaged a vacant building on Hayden Avenue on Monday and has left residents and firefighters concerned about the growing problem of fires in abandoned structures. "I would say there is a 98 percent chance this was arson," said Assistant Cleveland Fire Chief Brent Collins. "It's got to be. There's no one [living] here."
  Fourteen fire trucks responded to the three-story apartment building [...].

• Fire officials suspect that some people may be resorting to unlawful tactics to rid residential areas of such eyesores, which are known to serve as squatters' quarters and cover for drug use and dealing. "They are definitely arson fires at vacant houses," Collins said, adding that the Fire Department has placed arson signs throughout the Fleet-Harvard neighborhood. "We are trying to figure out what this is. We don't know if it's insurance fraud or people setting them for eyesores."

***

• The city set aside more than $11 million last year to deal with up to 10,000 abandoned houses, many emptied by foreclosure. Most of that money - $7.5 million, or more than three times as much as was budgeted in 2006 - went for demolition.

For more, see Fire on Hayden Avenue probably was arson, official says (Abandoned buildings, fed by foreclosure crisis, make easy targets).

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Cities' Suits Targeting Foreclosing Lenders To Recover Costs Of Blighted Neighborhoods

The National Law Journal recently reported (at Law.com):

• [C]ities now dealing with scores of abandoned, foreclosed homes have started suing banks and mortgage companies to recoup their costs, while other cities are hauling lenders before code enforcement boards and county courts to force them to maintain abandoned properties. The innovative legal tactics are designed to recoup the city's lost property taxes as well as the cost of fire departments, police, code enforcement or even demolition -- any city services needed to clean up or deal with the foreclosed properties.

• Cleveland; Baltimore; Buffalo, N.Y.; and Minneapolis, Minn., have all filed lawsuits against lenders or developers based on the devastating effects foreclosures have wreaked on their communities.

***

• [B]altimore took the unusual approach of filing suit in federal court under alleged Fair Housing Act violations. [...] John Relman, a Washington attorney, was hired by the city of Baltimore to file suit against Wells Fargo. He has received inquiries from other cities and expects more foreclosure suits to be filed in the future. "You can look at almost any of the major cities and see significant foreclosure trends, stretching across the country," said Relman of Relman & Dane. "Any city that has racially segregated housing patterns and high levels of foreclosure could wind up suing -- cities across the Midwest, cities in California. It's almost everywhere."

For more, see Empty Homes Spur Cities' Suits (Banks, lenders sued to recover costs) (if link expires, try here).neighborhood destruction from foreclosures zach

West Nile Worries Move Santa Clara Health Officials To Begin Aerial Search For Mosquito-Breeding Pools

In Santa Clara County, California, The San Jose Mercury News reports:

• Here's the latest fallout from the ever-widening housing crisis: West Nile virus. Worried that foreclosed homes will result in neglected swimming pools, health officials will embark Tuesday on an aerial search for back yard, watery havens for mosquitoes that potentially carry the deadly virus. A survey plane, equipped with a digital camera and a Global Positioning System, will fly at an altitude of 5,000 feet over parts of San Jose, Campbell, Cupertino, Gilroy, Los Gatos, Morgan Hill, Monte Sereno and Saratoga.

***

• "It's an unfortunate predicament that people are in," said Tim Mulligan, manager of Santa Clara County's Vector Control District, referring to the impact of foreclosures on the maintenance of swimming pools. "One of the first things to go bye-bye for a resident in foreclosure is pool maintenance," he said. "It's a drain on their resources."

For more, see Health officials searching for mosquito-breeding backyard pools. neighborhood destruction from foreclosures zach

Worcester Foreclosure Problem Not Limited To Homeowners Losing Roof Over Their Head

In Massachusetts, the Worcester Telegram & Gazette News reports:

• [E]arlier this year, police Capt. Paul B. Saucier pointed out, police inside a vacant foreclosed home discovered that the copper fittings to a natural gas line had been removed. The slightest jarring of the gas line, which hadn’t been shut off, and exposure to flame could have sparked a major explosion.

***

• There have been instances, Capt. Saucier said, of people found using drugs inside vacant foreclosed properties, but not to the extent the site could be considered a “drug den” where users frequently congregate. Where police have seen a sharp increase, the captain said, are thefts and vandalism at vacant foreclosed properties, particularly theft of copper pipe and fittings. The price of the metal, which can be sold at scrap yards, has risen from 65 cents a pound in 2002 to about $3 a pound today. The average home contains about $300 worth of copper pipe and fittings. Capt. Saucier noted a March 27 call police received from the real estate agent for a foreclosed house at 324 Millbury St. The agent said the house had been broken into and all copper pipe had been ripped out and removed.

• William T. Breault, chairman of the Main South Alliance for Public Safety, said the situation was painfully apparent at a foreclosed and vacant house at 1 Cheney St. in the Main South district. For several months, he said, the door locks remained broken and people were going in and out of the dwelling at all hours. Inside were mattresses and considerable trash. All the copper in the home had been stripped, although the gas hadn’t been shut off. The windows and doors were boarded shut earlier this year and vagrants seem to have stopped coming by. “That’s happening all over the place,” Mr. Breault said.

For the story, see Houses of cards. neighborhood destruction from foreclosures zach copper metal theft yak

Tens Of Thousands Of "Squatters" Swarm Into Vacant Foreclosed SW Florida Homes

In Cape Coral, Florida, The New York Times reports:

• In a county with one of the nation’s highest foreclosure rates, empty houses have attracted a new type of nonpaying tenant: bees. Tens of thousands of honeybees, building nests in garages, rafters, even furniture left behind. When a swarm came to the foreclosed ranch house at 3738 Santa Barbara Place in Cape Coral, town officials called B. Keith Councell, a fourth generation beekeeper and licensed bee remover.

• On a recent evening, Mr. Councell stood at the light blue house’s open garage door as hundreds of honeybees buzzed over his head and past his ears, disappearing into a hole behind the water meter. The house has been without a human occupant since December. Then he did what he does at most foreclosed homes: nothing. “If it’s in the yard I just take care of it,” Mr. Councell said. “But if it’s in the structure, usually I can’t get permission to go in. And it’s a problem, because somebody’s going to get stung. It creates a risk for everybody around.” [...] Last year, he said, he answered calls about bees in more than 100 vacant houses, and the volume was higher this year.

***

• Mr. Councell said he noticed an increase in calls to vacant houses two years ago, and steadily more since then. “If that continues, then we’ve got a big problem,” he said. [...] When a house is vacant and in foreclosure, Mr. Councell, who rarely uses a computer, finds himself in a tangle of red tape, following trails of loan records to locate the owner, often an out-of-state lender, then a local managing agent. Generally, he said, even when he finds the necessary people, they do not let him on the property, either not wanting to spend the money or not wanting to risk the liability.

For more, see Floridian Is the One to Call When Bees Move In.

In a related story from Cape Coral, Florida, see NBC 2 News: 30,000 bees found in foreclosed home. neighborhood destruction from foreclosures zach

More On Lawsuits Accusing Some Foreclosing Lenders Of A Role In Ruining Neighborhoods

ABC News and USA Today report:

• [H]awthorne [Area Community Council] and the city of Minneapolis are pioneers in an emerging civic strategy to sue lenders and banks to recoup lost revenue and reclaim neighborhoods devastated by the mortgage crisis. Around the country, the loss of tens of thousands of homes to foreclosure is shrinking cities' tax base, straining city services such as policing, and ruining neighborhoods. [...] Cleveland, Baltimore and Buffalo also have sued lenders and banks in recent months. St. Paul has written to its lenders threatening a lawsuit if they don't fix their foreclosed properties.

• "Hundreds of cities across the United States are in the same position," says Greg Squires, a professor of sociology at George Washington University who studies urban redevelopment. "I think there will be more lawsuits. If we get an early decision in one of these cases, it will either encourage or discourage" other cities from filing suit. Alan Mallach, a senior fellow at the National Housing Institute, says the lawsuits are "a bit of a reach under the laws of most states, but & a creative court could reasonably make some law in that direction."

For more, see Cities sue home lenders (Communities Take Banks, Lenders to Court for Failing to Fix Up Foreclosed Homes) (Go here for entire story on one web page). neighborhood destruction from foreclosures zach

Southwest Florida Cops Call For Help On Local Foreclosure Problem

In Southwest Florida, The News Press reports:

• Collier County sheriff's officials say they need the help of the community - civic associations, property owners and banks - to clean up foreclosed, abandoned homes that are potential blights on neighborhoods and magnets for crime. Authorities face a similar situation in Lehigh Acres, where more than 220 houses under construction are abandoned and 623 foreclosures were filed in April. Juveniles and adults squat in the buildings, vandalize and steal construction materials, Lee County sheriff's Capt. Ed Tamayo said.

***

• The result, if something isn't done, is the collapse of entire neighborhoods, he said. That's because abandoned homes, [Collier Undersheriff Kevin] Rambosk said, spawn crime, including vandalism, burglaries, thefts and indoor marijuana growing operations.

For more, see Foreclosed properties worry sheriffs' offices. neighborhood destruction from foreclosures zach

Abandoned Foreclosure Proceeding Results In Vacant Eyesore Leaving Town Officials' Hands Tied

In Wilton, Maine, the Sun Journal reports:

• Concerns over an abandoned home at 13 Temple Road brought a dozen neighbors from East Wilton before selectmen Tuesday. They came with a petition signed by 43 people asking the board to take action and demolish the house [...].

• A question of who owns the property that neighbors believed underwent foreclosure in 2003 revealed that Chase Manhattan Bank started foreclosure proceedings but never finished the process, Town Manager Peter Nielsen told the board. There has been no payment of taxes, water or sewer since 2001, Nielsen said. The former owner also believed the house had been foreclosed, he added. Selectmen voted unanimously to act to acquire the property after checking with town attorney Lee Bragg. The town can take no action on the property until it has acquired ownership, Code Enforcement Officer Paul Montague said.

***

• The house has been broken into and stripped of plumbing, presenting a danger to adjacent property owners, the petition claims. The shed and attached porch is also collapsing.

For the story, see Wilton neighbors voice concern over abandoned home.

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Go here for other posts on problems with vacant homes when the foreclosing lender fails to complete foreclosure or fails to record its deed after foreclosure sale. responsibility code violations foreclosure neighborhood destruction from foreclosures zach

One Block - Ten Vacant Homes

In St. Paul, Minnesota, South West Review decribes the condition of a one block stretch of Sims Avenue between Payne Avenue and Greenbrier Street that's been hammered by foreclosures:

• Of the 23 homes on the block, 10 are vacant or somewhere in the foreclosure process. Down at City Hall, it is known as the most worrisome block in the city, the block hardest hit by the current real-estate meltdown. "One side of the street is almost all vacant," says Bob Kessler, head of St. Paul's Department of Safety and Inspection.

For more, see On one block, 10 vacant homes.

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Minnesota Homeowner Loses Home In Copper Theft As Severed Gas Line Causes Explosion

In Minneapolis, Minnesota, the Minnesota Post reports on the destuctive effect that copper thieves are having on the city's North Side. The following excerpt decribes the predicament of one local homeowner who literally lost her home as a result of the actions of one or more copper thieves intent on scoring a couple of hundred bucks worth of copper:

• Sean McKenna, an arson investigator with the Minneapolis Police Department, points to the nightmare story of 3500 N. Fourth St. In December 2006, while homeowner Keili Mac was overseas on an extended vacation, a burglar severed a gas line in the basement, causing the house to fill with gas and explode. By the time Mac returned to the country, the house had been razed by the city because it was a hazard. To add insult to injury, McKenna said, Mac found herself mired in a contentious struggle with her insurance company, which balked at her claim because it didn't have the opportunity to evaluate damages before the demolition. McKenna is unaware of the final resolution of the case. Mac could not be reached for comment.

For more, see On Minneapolis' North Side, copper-theft epidemic adds to mounting housing problems.

For other stories on stolen copper, see Copper Thefts I and Copper Thefts II.

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220+ Abandoned Constructuion Sites Identified In One Southwest Florida Town

In Lehigh Acres, Florida, The News-Press reports:

• More than 220 abandoned construction sites have been identified in Lehigh Acres since June, according to Lee County's code enforcement office. [...] A construction project is considered abandoned if no inspection has been passed in six months, said Joan LaGuardia, spokeswoman for Lee County's Community Development department. [...] The homes are in various stages of construction.

***

• County officials are concerned the homes will deteriorate and become safety threats. "We'll have to keep inspecting them," LaGuardia said. But there's a question about how the county can pay for the inspections and any demolition that might be required with budget cuts looming. County Manager Don Stilwell already has told department heads to prepare for a 6 percent decrease in their budgets, LaGuardia said. "We have to cut our budget in code enforcement. We have to cut across the board," LaGuardia said.

For the story, see Town deals with empty nests (More than 220 sites identified since June) (no longer available online).neighborhood destruction from foreclosures zach

The Problems Of Vacant & Abandoned Homes Hitting Throughout South Florida

In South Florida, WTVJ-TV Channel 6's Consumer Investigative Unit recently did a report on the effect that vacant and abandoned houses are having on neighborhoods throughout the greater Miami-Fort Lauderdale area. A cop, code enforcement officer, real estate agent, bank foreclosed home inspectors and angry residents were interviewed for their comments on how these unwanted eyesores are further dragging down property values throughout the area, as well as how the locals are trying to deal with the health, safety, and crime issues that typically arise with the existences of vacant and abandoned homes.

For the story, see Foreclosure Fallout (watch video) (read story transcript).

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