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.