On the topic of blight in residential neighborhoods, Ohio-based Safeguard Properties Chairman Robert Klein said, “A vacant and abandoned house is not a bottle of wine. It doesn’t get better with age.”
The state of Ohio is taking steps to remedy the vacant and abandoned property crisis, however, and the rest of the country may follow suit. A bill that would reduce foreclosure timelines and therefore shorten the amount of time that residential properties remain vacant in Ohio passed by a unanimous 88-0 vote in the Ohio House of Representatives earlier this week.
Ohio HB 134 is the second attempt at passing a “fast track foreclosure” bill in the state of Ohio in order to expedite the residential foreclosure process after a similar bill failed last year in the Ohio Senate. Just as Ohio HB 134 did on Tuesday, the previous bill passed unanimously in the state’s House last year. The legislation, if it passes in the Ohio Senate, would reduce the lengthy foreclosure process in Ohio from its current timeline of two to three years or longer down to as low as six months in many cases.
For the mortgage industry, the passage of Ohio HB 134 represents a step toward solving what Five Star Institute President and CEO Ed Delgado termed a “community crisis of national proportion.”
“I applaud the Ohio House of Representatives for passing this bill, and I am pleased that it received such overwhelming support,” Delgado said. “Reducing the amount of time that properties are vacant will ultimately eliminate neighborhood blight and prevent the calamities that often accompany it, such as vandalism, violent sexual assault, drugs, prostitution, and overall deterioration of communities. This bill will take steps to ensure that these magnets for crime will be more quickly rehabilitated and promote the safety of neighborhoods across the state. I urge the Ohio Senate to act quickly in passing this bill.”
Ohio State Rep. Cheryl Grossman, a joint sponsor of Ohio HB 134, stated, “To be able to shorten this process from two to three years down to six months benefits everyone. I think it will have a huge impact. This is something that’s not unique to one area of the state. There are problems throughout the state and throughout our country on what falls in this category. What we can do to respect the homeowners that are maintaining their properties and being responsible and not have to have a boarded-up house next to them, that is huge.”
“A vacant and abandoned house is not a bottle of wine. It doesn’t get better with age.”
Robert Klein, Chairman, Safeguard Properties
The bill now moves on to the Ohio Senate, where it ran into problems last year. But Ohio HB 134 has some strong backing that may give the bill the lift it needs in order to pass the Senate and become law.
“We know the people in the Senate who are very involved in this project, including the Governor’s office, and we’re going to keep pushing to make this thing pass," Grossman said. "I feel pretty confident that once it passes in Ohio, other states will pick up on it.
The idea for the bill was first proposed by Columbus City Attorney Rick Pfeiffer, and Ohio HB 223 was introduced to the Ohio Senate in June 2013 by Grossman, a Republican, and Ohio State Rep. Michael Curtin, a Democrat. The bill passed unanimously in the Ohio House in April 2014, but then an amended version of the bill failed to make it out of the Ohio State Senate Finance Committee when it was introduced there eight months later in December. A new version of the bill, Ohio HB 134, was introduced earlier this year by the same two joint sponsors, Grossman and Curtin.
The changes to Ohio HB 134 from the bill that did not pass in the Ohio Senate last year include:
- additional criteria defining a property as vacant and abandoned (three things from a checklist instead of two);
- a high burden of proof (clear and convincing evidence) that the criteria for defining a property as vacant and abandoned are met;
- a requirement that the mortgagor must be in monetary fault, along with a burden of proof;
- a statement that if another mortgagee or defendant has filed an answer or objection, it will preclude the expedited foreclosure;
- allowing the purchaser to file a motion with the court to proceed with the transfer of the property title if the deed is not prepared within 14 days, and the recording of the court order or confirmation of sale can act as the transfer of title (the previous bill allowed only the recording of the court order to act as transfer of title without first going through the court motion process;
- and a requirement that the officer record the deed within 14 days after the confirmation of sale and payment of the balance due, not one or the other.
“This preserves the original intent of the bill to allow for an expedited process to foreclose on vacant and abandoned homes while not impeding the homeowners’ rights,” Grossman said. “It also allows second and subsequent attempts at sheriffs sales to be conducted without a minimum bid. This will aid in selling more foreclosed homes to reduce the number of empty houses in our neighborhoods, greatly preventing and reducing the number of blighted homes.”
If Ohio HB 134 passes in the Ohio Senate, Ohio would be the eighth state since 2009 to pass a fast track foreclosure law. The others are Michigan, Oklahoma, Kentucky, Indiana, New Jersey, and Nevada. As is the case in Ohio, the majority of these are judicial foreclosure states, meaning the foreclosure process must pass through the courts to be complete; the only one of the aforementioned states where the foreclosure process is completely non-judicial is Michigan.
Ohio’s bill raises the possibility of fast track foreclosure legislation at the national level. Delgado, who spoke on the topic of finding solutions for neighborhood blight and vacant properties at the National Property Preservation Conference in Washington, D.C. earlier this week, called Ohio HB 134 “an important template toward the introduction of a national course of solution for vacant and abandoned properties.”
“This is the first bill that actually details that once you get a property that is vacant and abandoned, it will be fast-tracked to about six months on the foreclosure,” Klein said. “That is going to have a tremendous, tremendous impact on vacant and blighted properties. We still have a way to go, but this is definitely the first push. The sooner we get this bill passed in the Ohio Senate, I think it will have an impact on community blight on a national scale.”