A city law, created about four months ago, requiring those filing foreclosures on vacant houses to post a $10,000 cash bond is proving to be an effective way to make sure owners, mostly banks, are more accountable, the city’s neighborhood improvement coordinator says.
The city has collected the bonds from 48 property owners for a total of $480,000, and is working to acquire the $10,000 bonds from 18 other property owners, said Maureen O’Neil, neighborhood improvement coordinator.
If a bank maintains the property, it would receive all but $200 of the $10,000 back once the house is sold. The $200 covers administration fees.
If the house falls into disrepair, the city can use the money for required maintenance or demolition.
Youngstown is only the third city in the country — Springfield, Mass., and Canton are the others — with a foreclosure-bond law, and Canton doesn’t enforce its ordinance, O’Neil said.
Since 2004, about 5,200 houses Youngstown went into foreclosure.
The focus in Youngstown is on properties foreclosed since the beginning of the year, O’Neil said, because they are typically in better condition than older foreclosed structures that already have been stripped of vinyl siding, copper piping and almost everything else.
O’Neil’s office is focused on the 159 houses in foreclosure in the city since January.
It will take time to pursue all of them, and there are additional foreclosures in the city that will make that list grow, O’Neil said.
“It’s a new program and we’re still developing it and seeing what works,” she said. “It’s another tool for code enforcement along with rental property registration, vacant property registration, the property maintenance appeals board and prosecutor hearings. Our focus is compliance and to bring properties up to code.”
However, not everyone supports the foreclosure bonds.
Robert Klein, founder of Safeguard Properties, a Valley View, Ohio, business that is the nation’s largest mortgage field service company, called Youngstown’s law “overblown” and “punitive.”
Safeguard manages about half of the properties on the city’s list of those that have paid the $10,000 cash bonds. The company’s clients include major banks such as JPMorgan Chase & Co., PNC Bank and Bank of America.
Those banks “obviously don’t like it,” Klein said. “One of the issues we’re having is the communities are not talking to the industry. They’re talking at the industry.”
The bond “only puts another wall between the industry and cities,” he said.
Having a $10,000 bond won’t help the situation because irresponsible property owners, he said, aren’t likely to comply while those who secure and maintain properties are forced to pay even though their homes aren’t causing problems.
Klein also suggests the city work toward helping to change state law that would allow banks to take possession of houses through foreclosure faster. That way, banks can obtain title while the property is in good condition and then sell it quicker, he said.
Among the 48 properties in which the owner has paid a $10,000 bond is 555 St. Louis Ave. on the South Side.
The grass is thick in the front of the property, and small trees are growing in the house’s gutters. While this house isn’t in good shape, it’s far from the worst on the street.
Ruth Alli, whose house — which has security cameras on the front porch — is only a vacant lot away from 555 St. Louis, said the house has been vacant for two or three years.
A company came one time to cut the grass, but did only a portion of it, left and have never come back, she said.
“It’s a good neighborhood,” Alli said. “I like it here, but that house [at 555] needs attention, and some of the other houses need to come down.”
In Cornersburg, 3240 and 3432 N. Wendover Circle are both on the $10,000 bond foreclosure list.
Augie and Barbara Angel have lived across the street from 3432 North Wendover since 1979.
Though the house at 3432 is in good shape, the grass is overgrown.
“You still have a responsibility to take care of the home,” Augie said. “There’s a lack of consideration for your neighbors by letting it look bad. We love this neighborhood and we want to stay. We’re trying to maintain our property and to have others not care is terrible.”