Friday, August 29, 2014

Homes in foreclosure: owners pushed out, but still responsible for upkeep

Homeowners who have been pushed out of their homes through foreclosure are still responsible for upkeep of the exterior. But many don't realize it.
Posted on Oct. 27, 2013 at 1:00 a.m.

ELKHART — As if the economic downturn and foreclosure of his home weren’t enough, Adam Wortinger got a letter from the Elkhart city code enforcement office recently that made his head spin.

Three years ago, Wortinger’s house at 1827 Roys Ave. in Elkhart was foreclosed upon. He and his family moved out and the locks on the house were changed.

But earlier this month, Wortinger received a letter telling him he needs to make repairs to the home.

The house was in decent condition when they moved out, he said, but after years of neglect it has a damaged roof and several gutters appear to be hanging by a thread.

Most concerning, though, is the chimney that appears to have exploded from a lightning strike. Remnants of the chimney have fallen onto the driveway and the remaining block is lying precariously on the roof. Officials believe it could easily fall off and potentially injure somebody.

A city code enforcement officer noticed the damage and initiated efforts to find the owner to seek repairs.

On Wednesday, Oct. 23, Wortinger appeared before a hearing conducted by the city in which property owners are pressed into either making repairs or accepting the fact that the property may be demolished.

He was contacted because his name is still listed on tax records.

Wortinger told the hearing officer he was unaware he was still responsible for the property.

After the hearing, he said he can’t afford to make the repairs.

“It’s pretty frustrating,” Wortinger said. “I didn’t know all this would come back on me or it would have never got this bad.”

widespread confusion

Confusion about who is responsible for upkeep and repairs to the exterior of foreclosed homes appears to be common.

“It’s a misunderstanding on behalf of 90 percent of them,” said James Tamke, a bankruptcy attorney in South Bend.

Tamke said he advises clients to maintain the property until the house is sold, often through a sheriff’s sale.

Rarely if ever do banks face any recourse for dilapidated properties, said building commissioner Denny Correll.

He expressed a sense of understanding for property owners whose homes, such as Wortinger’s, have been repossessed and then become an eyesore or public safety concern.

“You’re beating on a person who’s already been beaten up,” Correll said.

He could not estimate the percentage of homes in foreclosure that his staff investigates, but it clearly contributes to their workload.

The code enforcement department runs into the same situation when issuing tickets for ordinance violations such as tall grass and cosmetic concerns neighbors often complain about.

Correll estimates the office gets 20 calls a month from people notified about violations who are surprised to learn they are responsible for upkeep of the exterior.

Adding to the confusion over Wortinger’s property is a sign posted in the window of the home that urges anyone with concerns about the house’s condition to contact Chase Home Finance.

Hearing officer Lee Roy Berry on Wednesday ordered the city to contact the company and try to hold it accountable.

When reached for comment, a woman at Chase Home Finance said they have nothing to do with the foreclosure or Chase Bank and do not typically comment on specific residential cases.

She said Chase Home Financial specializes in safeguarding properties.

A blue tarp that once probably covered the chimney hole is tangled around itself and dangling off the side of the house — evidence that somebody had been attempting repairs on the roof.

Homeowner Responsibility

Tamke, the bankruptcy attorney, advises homeowners in the middle of foreclosure to try to go through the loss mitigation department of their mortgage company to see if they will accept a “deed in lieu of foreclosure” that shifts the responsibility of the property to the lender, he said.

But, Tamke added, “Sometimes the mortgage company doesn’t even want the property back, especially “if it’s on the wrong side of town.”

Admittedly, many homeowners facing foreclosure who have been removed from the home are less inclined to care about the property.

“If the mortgage company is that adamant about getting them out of there, they would move quickly to get the house sold,” Tamke said.

Gary Decker, a broker with Cressy & Everett Real Estate in Elkhart, said much of the problem is due to the slow foreclosure process.

“It’s such a lengthy, lengthy process and sometimes the property owners are left in the lurch,” Decker said.

Decker said he had not heard of Wortinger’s type of situation, but said he understands how it could happen.

Most mortgage notes include a clause that homeowners must maintain the property in a proper manner, Decker said, but sometimes, in the heat of the battle, homeowners forget the parameters of the loan.

“It’s almost one of those Catch-22 things,” Decker said. “Darned if you do, darned if you don’t.”

Decker said he believes smaller, more progressive mortgage companies prefer homeowners continue living in the home during the foreclosure process because the house is going to get more care if the owner stays.

Some local, smaller lenders seem to embrace that outlook because homes — particularly in distressed areas of the city — are more prone to vandalism and theft.

“Unfortunately, sometimes not all lenders look at it the same way,” he said.

On the other hand, banks have been left in a difficult position in dealing a huge number of empty houses following the recession, said Steven Aichner, senior mortgage banker from Lake County who is affiliated with the Indiana Association of Mortgage Brokers.

Keeping an eye on the properties becomes more difficult when banks are physically far removed from the properties.

“They’ve got massive departments that handle these things, but they’re all out of central processing offices (and) then rely on local cohorts, if there are any, to do what needs to be done,” Aichner said.

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