Fighting Foreclosure

City, nonprofits take proactive efforts to stave off ongoing effects of the housing crisis

Apr 30, 2014 at 10:02 am


amilton County foreclosures decreased again in 2013, but communities are still feeling the effects of the housing crisis, signaling a long road to recovery. In the meantime, various government and private organizations are taking proactive measures to reverse the problems that often come with disproportionate numbers of foreclosures. 

Foreclosure filings dropped to 4,268 from 5,645 in 2012 — the lowest amount since before the housing crisis began, according to the 11th annual Working in Neighborhoods foreclosure report released last week. WIN is a nonprofit focused on community development, home ownership and economic learning.

Still, Ohio’s slow foreclosure process and the backlog of unresolved foreclosures keep the state ranked high (fifth) in foreclosure rates despite drops in recent filings. It’s reported that one in four county borrowers are considered “underwater” on mortgage loans. Cincinnati’s foreclosure numbers are reported as better than the state average.

“We know we’re moving out of this at some point, hopefully,” says WIN Executive Director Barbara Busch. “The reality is we still don’t have a lot of third-party purchasers. Most everything goes back to the foreclosing institution.”

Since 2006, 22,190 homes have been sold through public auctions in Hamilton County, including the 2,418 sold last year, which is a 17.5 percent decrease from 2012.

Foreclosures filed last year amounted for 20 percent of 2013 sales, while nearly 60 percent stemmed from 2012 filings and the rest from years prior. Nearly all of the properties auctioned were listed as residential and 83 percent were owner occupied. Lenders bought 86 percent of the properties last year. Cincinnati homes sold at auction totaled 842 last year, but overall accounted for 9,494 since 2006. Foreclosures in the 10 most affected Cincinnati neighborhoods saw at least 10 percent of their homeowners lose their houses.

Five banks — Bank of America, J.P. Morgan Chase, US Bank, Wells Fargo and Fifth Third Bank — accounted for about half of the filed foreclosures last year. And seven lenders filed more than 100 foreclosures. The recent foreclosures, however, are no longer a result of subprime home loans that dropped the market on its head several years ago, Busch says.

“A lot of these are happening because of unemployment, divorce and health problems,” Busch says.

In Cincinnati, Westwood and West and East Price Hill accounted for the top three neighborhoods for foreclosure sales as well as the top three foreclosure listings.

Those three neighborhoods were also chosen for the 2012 pilot phase of the Cincinnati Vacant Foreclosed Residential Property Registration ordinance that launched citywide earlier this month. It forces banks or “mortgagees” to register vacant foreclosed property within 10 days, take accountability for the property and ensure maintenance for the empty property. Prior to the ordinance, identifying who was accountable for the property proved difficult because everyone involved pointed at each other, which resulted in several dilapidated homes, says Ed Cunningham, manager for Cincinnati’s Property Maintenance and Code Enforcement Division.

The ordinance also allows the city to fine titleholders for any maintenance and registration violations. Since July 2012, the city fined titleholders $509,000 through 587 citations: JPMorgan Chase accounted for 104 totaling $90,500; Bank of America had 62 for $53,000; and Wells Fargo had 54 for $46,000.

The program also attempts to curb violence by forcing titleholders to board up properties in an attempt to prevent people from hiding drugs in vacancies or becoming a venue for prostitution and other types of criminal activity, Cunningham says.

“They are conducive to crime in addition to being fire hazards,” Cunningham says.

Colerain Township also adopted a similar ordinance earlier this year, says Geoff Milz, director of the Colerain Building, Planning and Zoning Department. Colerain registered 434 foreclosure listings and 246 sales at a median sale price of $46,000.

“What happens with these vacant, foreclosed buildings is their issues are externalizing on everyone else,” Milz says. “It’s a drain on the entire community.”

Milz began working toward a solution to the problem of having foreclosed homes sit empty without anyone taking accountability for them, just as the city did.

Colerain’s ordinance mirrors Cincinnati’s.

“I now have a person in control should something go wrong,” Milz says. “I want to be able to drive down the street and not be able to tell that a house is vacant or foreclosed.”

Milz says banks are responding to the program.

“Before I even know the property is vacant and foreclosed, the banks are becoming proactive,” Milz says.

In addition, Cincinnati’s ordinance should curb some of the costs to deal with blighted properties. As they become uninhabitable and condemned they eventually go through a process allowing the city to demolish them. Cincinnati spent nearly $7 million in the past year and a half razing blighted properties  — 1,172 residential properties and another 509 buildings.

“A majority of them were foreclosed at one point,” Cunningham says.

The neighborhoods that saw the most homes demolished during that time were Avondale (189), Walnut Hills (154) and East Price Hill (107).

“There’s been a significant number of demolitions in East Price Hill and West Price Hill, for that matter,” says Ken Smith, executive director for Price Hill Will, a nonprofit geared toward development in the neighborhood. “The demolition is a good thing for the neighborhood. Unfortunately, it shouldn’t have reached this point.”

Price Hill Will leads a program designed toward purchasing homes that are blighted, rehabbing and then selling them in order to increase property values in Price Hill that have decreased because of foreclosures. Smith says Price Hill was one of the first communities hit hard by the housing crisis, but by that same token he shares optimism it is also poised to recover quicker than other communities as a result.

So far, Price Hill Will bought 60 single-family homes and invested between 5 and 6 million dollars in purchasing and renovation costs, Smith says.

“We’re rehabbing the homes to stimulate the housing in the neighborhood,” Smith says.

Busch says it’s imperative to pool more public and private resources to stall foreclosures and keep homes in habitable conditions. The decline in foreclosures has not reduced the amount of families whose houses WIN attempts to save.

“We see about 900 people every year who are in danger of losing their home,” Busch says.

When WIN began its foreclosure prevention counseling in the early 1980s, it helped one or two clients per year, Busch says, but in 2009, 1,500 families sought help.

“And we’re only one organization,” Busch says. “We’re looking at 10 to 15 years to get these communities out of the devastation they’ve caused.” ©