The housing industry has reported many positive metrics for 2015, leading many to proclaim its recovery from the devastation of 2008. Vacancy levels remain high in many parts of the country, however, as so-called "zombie properties"—abandoned homes for which foreclosure has begun but not been completed—are breeding blight in communities.
Many mortgagees or servicers are refusing to perform consistent upkeep on zombie properties because the foreclosure process is not yet complete, and the homeowner has abandoned the property; the result is the spreading of blight, which often deters investment, depresses market values, and attracts violent crime, having a negative impact the health of entire communities.
The issue of stabilizing such communities was a major point of discussion at the Property Management Lab as part of the 2015 Five Star Conference and Expo on Thursday in Dallas. Panels discussed such topics as communications strategies between vendors and servicers, best practices for registering vacant properties, partnerships between stake holders for maintaining vacant properties, the challenge of managing properties to code compliance, and ensuring consistency between properties.
The former plan to engage code enforcement in order to avoid citations from the city was for servicers and field services providers to make a pitch to the city officials in which the property was located. But the cities are in a different position because revenues are down due to lower property values.
"The future of property preservation is to align that property preservation list of tasks that need to be done to the property to be consistent from start to end. . ."
"What we're seeing is more aggressive citations and more vacant property registration fees, because that's making up the city's revenue, right?" said Kelllie Chambers, Assistant VP, Investor Relations, Safeguard Properties. "What we've been successful in doing in working with the cities is employing an actual employee in the city and having them go and meet with code enforcement and make more of a personal connection, so that if the code officer has a problem at 123 Main Street, instead of issuing a citation, they call up their personal representative from Safeguard, or Wells Fargo, or Chase, and says, 'Hey Kellie, I talk to you all the time. I've got this problem at 123 Main Street. You think you can get somebody out here today to resolve it?'"
Chambers said the property preservation process needs to be better aligned from pre-foreclosure sale all the way to REO, because now servicers generally have a minimalist approach to property maintenance in pre-foreclosure sale so as not to interfere with the borrower's homeownership. Once the property goes into the servicer's REO inventory, however, they are typically much more proactive about maintaining the properties, which can send a mixed message to the other homeowners on the block.
"On one side of them, they could have a property in pre-foreclosure sale with the bare minimum being done, gutters hanging, with the grass being cut every two weeks," she said. "On the other side of them, they could have a vacant abandoned property that's REO with the grass being cut every six or seven days, and there's fresh mulch, and they're pressure washing the house. It doesn't bode well for the community. It doesn’t send a good, consistent message to the neighbors. The future of property preservation is to align that property preservation list of tasks that need to be done to the property to be consistent from start to end and not just up the ante or do more just because you have the property in your own inventory."
Editor's Note: The Five Star Institute is the parent company of DS News and DSNews.com.