Foreclosed and abandoned properties in Lowell

November 17, 2010 by DickH Posted in Lowell 7 Comments

Every Tuesday I call Jack Baldwin on WCAP’s midday program to give an update on the latest real estate statistics. Yesterday we received a number of calls from Lowell homeowners who lived next to foreclosed and abandoned properties that had fallen into disrepair, thereby diminishing the value of all the homes in the vicinity. What could be done to rectify this, they asked?

In the summer of 2008, the Lowell City Council adopted a new article in the Lowell Code of Ordinances dealing with vacant and foreclosed properties (Chapter 227-7 to 227-16). The ordinance requires the lender, at the commencement of any foreclosure action, to register with the city, to identify a resident (i.e., within 20 miles) agent responsible for the property, and to maintain the property. Noncompliance results in a substantial fine that continues to grow over time.

The city ordinance seems comprehensive enough; the challenge is in identifying the responsible party which is a consequence of the changing nature of the lending industry. Years ago, home loans were made by local banks and administered by folks who lived in the community and had a substantial interest in preventing problem properties from falling into decay. Over the past decade, the home loan business was transformed from a local/regional operation to one nationwide in scope. Huge national lenders became more interested in the volume rather than the quality of transactions. To those responsible for monitoring these loans and the property securing them, a mortgage no longer represented a specific piece of property; it was just another line on a spreadsheet along with hundreds of thousands of others. While this model resulted in huge profits for the home lending industry, it also disengaged that industry from the communities in which the homes were located. It was that combination of greed and disengagement that gave rise to the housing bubble in the first place and it’s that same greed and disengagement that perpetuates the problems of unmaintained foreclosed properties that plague us today. Lowell’s ordinance is a good one, but the scale of the problem is so large that no ordinance by itself will solve these problems.

If there’s any good news it’s that the rate of foreclosures seems to be slowing slightly. The “order of notice” is the document that signals the start of the foreclosure process. The number of orders of notice recorded for the Middlesex North District in October 2010 was down 23% from the number recorded in October 2009. For the first two weeks in November, the number was down 63%. Hopefully, that trend will continue. That’s of little consolation to homeowners who live next to dilapidated, abandoned houses. For that reason, we’ll continue to work closely with the city’s Inspectional Services Division to identify the parties responsible for these properties so they can be coerced into performing minimum maintenance on them.

7 Responses to Foreclosed and abandoned properties in Lowell

  1. kad barma says:

    Thanks as always for these thoughtful, insightful and informative pieces on the local real estate and mortgage situation. I find these posts to be the among the most valuable and interesting local news pieces from any source. It’s very much appreciated that you take the time to share the statistics with all of us.

    Thanks!!!

  2. Adam Baacke says:

    Dick,

    Thank you for posting this. More importantly thank you for your willingness to work closely with our new Division of Development Services as we look to be more proactive and more effective at enforcing the City’s ordinances with respect to foreclosed and vacant properties.

    Since the implementation of the reorganization plan adopted by the Lowell City Council during the Summer, DPD’s Division of Development Services has identified and begun to implement a number of steps to address this challenge.

    First, we appreciate our partnership with the Registry of Deeds to identify properties at the earliest public notice that a foreclosure may be pending. We then use that information to inform both the foreclosing lender and the property owner of the requirements of the ordinance.

    Second, our inspectors have been instructed to observe and proactively address code enforcement issues at surrounding properties with a particular focus on troubled buildings when they are on an inspection call.

    Third, we are aggressively pursuing the larger lending institutions who have not been complying with all management and maintenance responsibilities under the vacant and foreclosed properties ordinances.

    Finally, we are working with the Law Department and City Council to develop a receivership program. Under this program, we will seek court-appointed receivers for the most troubled buildings. The receivers will then be empowered to assume management of the properties, rehabilitate them to full compliance with all codes, and foreclose on the properties to recover their costs through sale or long-term management of them. Under such a program, the buildings would be restored, reversing their blighting influence on their surroundings. Potentially more importantly, the threat of receivership should compel other lenders and absentee owners of troubled and vacant buildings to improve their management and maintenance of their buildings to avoid the risk of losing their entire investments to a receiver.

    We are also open to other suggestions and ideas from the public. We anticipate that this matter will be discussed in some detail at a meeting of the City Council’s Housing Subcommittee on November 30 at 5:30.

    Thanks,
    Adam

  3. Arthur says:

    Does the decline in Orders of Notice reflect economic improvement or the moratoria some lenders have declared because of robo-signers ?

  4. Righty Bulger says:

    Caught you on WCAP yesterday Dick. Great segment. You should have your own show or at the very least appear on their other programs, too.

  5. DickH says:

    Thanks for the comments. I’ll try to write more real-estate related stuff here in the future.

    I don’t think that the decline in the orders of notice in the last six weeks is an outgrowth of the short-lived foreclosure freeze by some lenders. A couple of things contribute to the decline. In Lowell, the safety net for home owners is thinner than in the towns so many of the problem properties have already been repossessed – not everyone is going to lose his home and most that will already have.

    The rate of increase of foreclosures earlier this year was actually higher in the towns than in Lowell, but that’s been counteracted extremely low interest rates and less of a decline in home values than was seen in the city. With values more stable, fewer people are underwater and therefore able to sell. With interest rates so low, anyone with decent credit can afford a good-sized loan provided the house appraises for a high enough value.

    Finally, back in 2007 when foreclosures really began to rise, people would ask me what was going to happen with foreclosure rates. My answer: tell me what’s going to happen with unemployment because every lost job is a potential lost home. While unemployment is still high, it’s been relatively stable. If that were to spike upward again, so would the foreclosure rate.

  7. Gregory Holm says:

    Can abandoned, vacant properties be purchased from the city? If so how does one go about this?