Land bank to speed up foreclosures (Telegraph-Forum)

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Land bank to speed up foreclosures (Telegraph-Forum)

BUCYRUS – County treasurer Gary Cole uses as an example a vacant lot in Crestline.

“There was a house that was torn down several years ago, and the city charged $10,000 to tear it down and put an assessment on it. Now there’s a vacant lot with the delinquent taxes plus the assessment, so we’re talking about $17,000, $18,000 on a lot. Well, obviously nobody’s going to buy that,” he said.

Any number of things could happen to a property like that. It could go to a county auditor’s sale, where the county gets whatever it can for the property and transfers it to an individual, or the village could assume responsibility for the property, which would wipe away the tax lien. Or the property could just continue sitting there as is.

Very soon, if the county commissioners go through the required motions next month, there will be another option for properties like the vacant lot in Crestline — a county land bank.

The commissioners have chartered a county land re-utilization corporation, or land bank, to act as an agency “for the reclamation, rehabilitation and re-utilization of vacant, abandoned, tax-foreclosed or other real property in the county,” according to a resolution the commissioners approved earlier this month.

This makes the land bank official, immediately, but the matter of initial funding has to be addressed first. Seed money of $75,000 from the county treasurer’s office is available, but first it has to actually be made available, via the commissioners approving a resolution to authorize an additional deduction of funds from the county’s delinquent tax collections, which will in turn be put into a new land bank fund.

“That’s the way we’ll probably go, and that’s one of the first things we’ll have to do. If we don’t get it done early next month we’ll have to wait four or five months because the next settlement isn’t until June,” Cole said.

Many are delinquent

Crawford County’s problem properties certainly aren’t going anywhere. At least the vacant lot in Crestline doesn’t have a dilapidated house on it; most of the county’s 2,000 or so vacant properties do. Most of those are situated in the cities of Bucyrus and Galion. The vast majority are delinquent on property taxes, but there are exceptions.

“Some are abandoned, not being lived in, but the taxes are still being paid on them. There are houses full of holes, the roof’s off, but they’re still paying taxes on them so they’re not delinquent, and the land bank deals only with delinquent properties. So it’s difficult,” Cole said.

Under the current system in the county, settling the disposition of problem properties is even more difficult, or at the very least time-consuming. In Ohio, Cuyahoga County became the first governmental entity to organize a land bank a decade ago because the traditional foreclosure process had simply become overwhelmed by properties on its delinquent tax rolls that numbered in the tens of thousands.

Today there are more than two dozen county land banks in Ohio, including in Richland and Seneca counties. In Crawford County there are fewer than 2,000 delinquent properties so the problem here is a fraction of what the big cities face.

Foreclosure process

But getting a foreclosed property taken care of still takes a long time under the current system — from six months to a year, while the land bank will shorten that process down to six to eight weeks. Here’s how it works now:

A delinquent property has to sit for a year before it becomes eligible for foreclosure. Provided the value of the property is greater than the taxes owed, as is usually the case, the property will eventually go to a sheriff’s sale. If after two of those sales it hasn’t sold, the property then goes to an auditor’s sale. A land bank, however, can step in before much of this slow-moving routine takes place.

“Going through the process, there are certain stages at which the land bank could assume responsibility for it or determine the direction it goes to make it more efficient in terms of resolving it,” Cole said.

“Offices like my office, the commissioners, we do what the government tells us to do, whereas this organization can do anything it wants to if the law doesn’t prevent it. A land bank can form policies and so forth as long as they don’t contradict the law and are reasonable.”

Safeguard in place

Perhaps understandably, however, some people may get nervous about the prospect of a quasi-governmental agency doing what it wants, particularly when its decisions can affect the character of a neighborhood, and by extension its property values.

“A process is in place now to deal with those situations. If a lot is too small and the land bank has to combine lots, the zoning and planning commissions for the city would have to deal with it. They could say no, that they think that’s too much of a change,” county prosecutor Matt Crall said.

“But that’s the safeguard that the other people in the neighborhood have, too. There are hearings and they have to give notification to all the neighbors, and that’s good. I think a land bank is definitely progress, but sometimes where you’re situated shapes your opinion.”

Cole said one of the county land bank’s priorities will be making sure property values don’t deteriorate so that the character of a neighborhood can be maintained, or even improved. That may result in doing some things differently than in the past.

“In the cities some of these homes were built on very small lots, and now you couldn’t rebuild on a lot that’s in between two houses, so you have to split that lot up and make it accessible to the neighbors to expand their properties. So it would actually improve their value. They’re called side lot programs, and that’s something we would look at too,” Cole said.

As things stand now, every foreclosure in the county goes through the prosecutor’s office. That’s why the prosecutor cannot be on the Crawford County land bank’s five-member board, which at least to start will have five members – two county commissioners, the county treasurer, a representative from Bucyrus (the mayor) and another from Galion.

“The county wants to get its tax dollars, so that’s the conflict involved with me and my office,” Crall said.

“The treasurer is involved because statutorily he’s required to be. There are a lot of legal opinions about who can be involved, who can’t be. One opinion is that if the treasurer wasn’t statutorily required to be involved than he wouldn’t be allowed, which is kind of strange.”

Although the land bank may lighten the foreclosure load for the prosecutor’s office, Crall’s office will still remain charged with retrieving the tax money that’s owed the county. And property foreclosures certainly aren’t going away.

“You’re always going to have your set number of situations that just happen to people, that’s never going to change. People who lost their jobs because of the downturn in the economy, a lot of times they’re still working but they went from a $24-an-hour job to a $12-an-hour job and they’re supporting a family, and it gets hard,” the prosecutor said.

“I was asked the other night why we don’t just foreclose on all these properties and get them through, but the problem is that will have a detrimental effect on property values. The other question was about how long we wait to foreclose on a property. Each situation is different. We have payment plans, and sometimes people don’t make any effort. Our determination is based on that.”

Crall said his office has actually made progress in resolving tax delinquencies to the financial benefit of the county in recent years, and credited an improving economy for that to a large degree. Last year, his office reached the amount budgeted by the commissioners for all of 2015 in May.

In a perfect world, of course, there would be no need for a county land bank. Taxes would be collected, and more importantly, residents could remain in their homes, no matter how it happens.

“We’ve even had some cases where the owners bought the house at the sheriff’s sale because they were able to come up with the money at the end,” Crall said. “People don’t want to lose their homes.”

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