Monday, May 8, 2017
[This is the second in a series of essays by Kermit Lind, Clinical Professor of Law Emeritus, Cleveland-Marshall College of Law, Cleveland State University.]
Various observers see different things when they look at houses and buildings abandoned during the mortgage crisis. From different, sometimes competing, points of view, communities need a sustained collaboration of perspectives—local public officials from different departments and agencies, civic and public interest groups, community advocates--using all relevant data and strategic solutions to deal with new threats to residential neighborhoods. This blog post continues an on-going look at a few examples of what different people see in blighted dwellings.
The first blog post in this series is available here.
Conflicting perspectives must be reconciled. Home owners, lenders, investors, speculators, creditors, debt collectors, neighbors, community advocates, local officials, state officials, federal officials, and public agencies are pursuing different, and often conflicting, objectives in relation to real property abandonment. Governments at various levels have different agendas, as do courts, prosecutors, and policing agencies, even those within the same jurisdiction.
Government-sponsored enterprises, global financial institutions, real estate investment trusts, and their servicing agents also do not share the same vision. Each businesss’s individual interests compete for profit with procedures that undermine the success of the business plans of the others.
The risks resulting from the asymmetrical battle between the perspectives of housing consumers and those of global financial, investment, and real estate businesses makes home ownership less possible and less attractive for young families than at any time during the last century.
Responsible maintenance of dwelling places is the legal and equitable obligation of those who own or control housing. It is also essential to the long-term viability of a housing finance industry that both consumers and investors can trust. Those harmed when property maintenance responsibilities are abandoned include the creditors and investors in neighboring dwellings whose paying debtors may default on their mortgage loans and maintenance when their home’s value plummets. Maintenance issues are omnipresent in the scenario of the concentration and spread of subprime loans, rapid defaults, rising foreclosures, low-value sheriff sales, and the dumping of bank “real estate owned” properties to speculators. Maintenance is abandoned early in the sequence, and the possession of dwellings is subsequently abandoned. The breakdown of maintenance begins a decline toward blight from which recovery is costlier than the value of the property.
Better housing and neighborhood environmental code compliance is essential for stopping rampant abandonment and dystopia. Unfortunately, the code compliance apparatus as currently constituted in most communities is not capable of dealing with abandoned, worthless housing. The various local government compliance and enforcement agencies exercising police power in cities operate in separate silos and often at cross-purposes. Laws and law enforcement policies are obsolete in the context of new fangled housing marketing and financing.
Code compliance is also thwarted when each agency pursues its limited mission without regard to the residents who depend on effective law enforcement for a healthy, safe, and secure residency. There is insufficient coordination in public safety operations to constitute a reliable system able to ensure compliance with neighborhood housing, health, and safety laws, especially compliance by absentee owners and controlling lien holders.
The article will continue next week with Part 3 in this 3 part series.
This is a revised and shorter version of the paper published in Probate & Property, Vol. 29, No. 2, (March/April 2015) (American Bar Association): pp. 1-9, and available here.