Is Virginia Okay with Foreclosure Fraud?

As we gear up for the 2012 General Assembly session, we must review important bills from last year. Among the most important, was cracking down on foreclosure fraud. At last year’s General Assembly Session, Virginia’s legislators voted against a bill intended to reduce foreclosure fraud.  We all know about the robo signing scandal and the foreclosures using fake signatures that threatens property rights in Virginia. Yet Virginia’s legislators refused to protect property rights in the Commonwealth by killing a bill that would have made anyone who uses fake or fraudulent signatures in a foreclosure liable to the injured party.

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Virginia’s vacant buildings: what’s stopping the free market? (Part 2)

This is a guest post by Lane Pearson. Lane works as an attorney and urban planner for the Better Housing Coalition’s Center for Neighborhood Revitalization. He lives in Richmond Virginia.

Lane Pearson

The problems associated with vacant buildings are by no means unique to Richmond or other localities in Virginia. In my last blogpost I discussed how a process that gives property owners the ability to recoup more value from their property could make a big difference. So it makes sense to explore tools that other cities and states are using in their efforts to address blight.  One innovative tool that has been used successfully in a number of places and is gaining traction nationwide is receivership for blighted buildings.

Receivership is an equitable tool traditionally used by courts in business disputes or bankruptcies, in cases where a viable business is managed by a court-appointed receiver in order to preserve the assets of the business while the litigating parties await the resolution of their dispute.  Receivership for blighted buildings works under this same principle, wherein a court can appoint a receiver to take possession (but not ownership) of vacant and blighted building in order to repair it and make it habitable again.  Unlike demolition or Spot Blight Abatement, the value of the asset, in this case the blighted building, is not only preserved, but actually enhanced.  This is of direct benefit to the neighborhood as well as to the property owner.  Once the work of the receiver is complete, the cost of the repair work becomes a lien on the property.  This allows the receiver to recover the costs through a court-ordered auction, if necessary, but it also allows the property owner to pay off the lien and maintain ownership of the property, or sell it in a private transaction.

The receivership proposal that is currently being discussed for Virginia is very limited in scope.  Unlike the receivership legislation that Texas recently passed, or the receivership program that Baltimore has been using successfully for years now, the Virginia proposal would only apply to properties where eminent domain has already been authorized under the Spot Blight Abatement process.  Moreover, the Virginia approach would only apply to vacant and blighted residential properties and does not allow for a zoning change to occur as a result.  While this does significantly limit the scope, it also erases any concern over property rights and expanded government takings power.

The Virginia proposal, in its current incarnation, would allow a locality to petition the court to be appointed as the receiver for a vacant and blighted residential property that has already been the subject of a Spot Blight Abatement ordinance by the local governing body.  Acting as receiver, the locality can then contract for all reasonable repairs necessary to bring the property into compliance with the building code.  The cost of the repair work is attached to the property as a lien on par with delinquent real estate taxes.  This twist on traditional receivership for blighted buildings allows the blighted condition of the property to be improved and adds a layer of protection for the property owner.  The owner of the property can redeem it at any time by paying the receiver’s lien.

Most importantly, the Virginia derelict building receivership proposal would offer relief to those most affected by blight: the surrounding neighbors.  Often, the property rights of those who live near blighted properties are forgotten in the debate over blight and private property rights.  When every day that passes presents a new risk of fire, collapse, criminal activity and drug use, a solution that results in the cleanup and repair of a blighted building while offering a new layer of protection to the owner of the blighted property is good for everyone involved.

Virginia’s vacant buildings: what’s stopping the free market? Part 1

This is a guest post by Lane Pearson. Lane works as an attorney and urban planner for the Better Housing Coalition’s Center for Neighborhood Revitalization. He lives in Richmond Virginia.

Lane Pearson

Vacant, blighted buildings are more than just eyesores. On a fundamental level, blight is a signal of disinvestment in a neighborhood, and can quickly create a domino effect. The presence of blight in a community erodes tax revenues, decreases property values, and threatens the health, safety and welfare of neighbors.  The hazards they create pose a myriad of problems, which result in a disproportionate cost to local fire, police, building, and health departments.

Here in Richmond there are roughly 2300 vacant buildings.  Although not all of these have building code issues, a survey of city neighborhoods illustrates the pervasiveness of the problem of blight.  A few years ago the City of Richmond conducted an analysis of citywide crime data, and of all of the economic and demographic variables studied, vacant properties had the highest correlation with the incidence of crime.

This problem is not unique to Richmond.  A study from Philadelphia found that houses within 150 feet of a vacant property experienced a net loss of $7,627 in value.  A study from Austin, Texas found that blocks with unsecured vacant buildings had 3.2 times as many drug calls to police, 1.8 times as many theft calls, and 2 times the number of violent calls as blocks without vacant buildings.

While demolition is a short-term, and in some cases necessary, solution, the long term effects on neighborhood stability and the tax-base of a locality make it an inferior alternative to rehabilitation.

Under Virginia law, localities have several tools that can be used to address blight.  Owners of vacant buildings can be cited for code violations and taken to court if the violations are not resolved.  Buildings with unsafe structural conditions can be boarded up, stabilized, or demolished in whole or in part by localities.  If the property owners are not paying their property taxes, the locality can foreclose on the tax lien and sell the property at tax auction.  In particular cases, the locality can, using eminent domain power, seize a building through the Spot Blight Abatement process.

The problem with these tools is that when a property owner is unwilling or unable to repair a vacant building, implementation of these tools in a manner that results in renovation and repair can be excruciatingly slow. The tax sale process, for example, is often backlogged due to the sheer number of tax-delinquent properties and the limited resources localities can devote to enforcing the tax liens.  Code violations have relatively minor penalties, and are particularly ineffective when the property has been abandoned and the owner cannot be located.  The Spot Blight Abatement process is a useful tool, but it is so demanding of the time and resources of a locality that it is only used for specific, high-profile blighted properties.  Moreover, the Spot Blight Abatement process takes years, and the blighted condition of the building is not addressed until after it the entire eminent domain process has played out.

Additionally, in Spot Blight Abatement proceedings, once eminent domain has been authorized, a property’s fate is sealed, and it is simply a matter of procedure before the property is seized and the owner compensated.  Since these properties are, by definition, very deteriorated, the just compensation due to the property owner is less than what the owner would receive if the property were repaired and sold in habitable condition. That is a significant reason why the free market isn’t able to solve our vacant property problem in Richmond. A process that gives property owners the ability to recoup more value from their property could make a big difference. I’ll discuss that in a future post.

(Part 2 to follow)

Strengthening property rights will improve our housing market

Oakland County Clerk Bill Bullard talks about our endangered property rights and how they are dragging down the housing market in Michigan. This national crisis is threatening property rights in Virginia as well. Banks are foreclosing on properties they don’t have clear title to and Virginia property owners may not actually own their home because of fraudulent signatures.

Oakland County, Michigan Clerk Bill Bullard

Bill’s solution to our housing woes is to strengthen property rights in Michigan. Improving the recording process of who owns the mortgage is vital to improving our housing market. Virginia should be leading the way in strengthening property rights to improve our housing market. Below are some excerpts from Bill Bullards editorial:

“Private property was the original source of freedom. It still is its main bulwark.” —Walter Lippman

Private property rights are under attack in a widespread national mortgage fraud scandal. Accurate property records are central to protecting those property rights. This national scandal is touching Oakland County records and therefore our property owners.

In the last several years, commercial lenders have invented a new way to trade ownership of mortgages while leaving out the property owners and local record keepers. New companies such as Mortgage Electronic Registration Services (MERS) and DOCx were set up for the sole purpose of receiving documents from lending institutions to speed up the foreclosure process.

In their rush to process these documents, the companies hired workers to sign these documents. These workers were then listed as “vice presidents” of dozens of different banks. One such worker admitted to signing up to 5,000 of these documents a day. Other individuals have admitted to forging notary signatures to these documents as well.

Tens of thousands of Michigan foreclosures in recent years could be overturned with huge financial consequences for both the former and current owners of that property. Sheriff Bouchard wisely halted all current MERS foreclosures in Oakland County until the legal ramifications of the case become clearer.

State law needs to be changed to protect the rights of all property owners. When transferring the ownership of your mortgage, lending institutions should be required to file an affidavit with the Register of Deeds containing the name and contact information of the institution that is taking ownership of the mortgage. I have encountered numerous homeowners struggling to save their homes who simply do not know who they should be negotiating with. All of us deserve to know who owns mortgage on our property.

Our property rights are the foundation of our economy and most basic freedom. The filing of fraudulent property records endangers the sanctity of all of our records and therefore our property rights. This is why it is so important that the perpetrators of this fraud be exposed and prosecuted.

“Whites Only” – racism & prejudice still exist…even in Virginia

Click the image above for more information and to join the discussion on HOME's Facebook page

Signs, such as the one displayed on the right, that display “Whites Only” demonstrate how prejudice and racism still exist, even cosmopolitan Virginia.

The FBI recently released its 2009 Hate Crimes Statistics. This report includes metrics for hate crimes across the nation. It also has a state-by-state breakdown. In 2009, there were 6,604 incidents of hate crimes reported. This was down from 2008. Out of these 6,604 incidents, there were 8,336 victims and this number has also gone down. These victims can be individuals, businesses or institutions.

Virginia had 150 alleged crimes reported. The “whites only” picture above is not a hate crime, however it reflects a prejudice that can seriously damage a person’s ability to live, work and educate themselves in a neighborhood of their choosing. These numbers from the FBI’s hate crimes report highlight how prejudice and racism still exist. These crimes deny people freedom and opportunity to build a life of their choosing. As the numbers show, these incidents happen in Virginia. A few shocking examples of hate crimes across America include:

three men were indicted in New Mexico for assaulting a disabled Navajo man; one individual was sentenced for putting a hangman’s noose on the house of a Honduran immigrant in Louisiana; and another man was sentenced for burning a predominately African-American church in Massachusetts.

This is a sober reminder that we must continue to be vigilant to protect the rights, freedoms and opportunities granted to all in a free society. That is why HOME’s work protecting every Virginian’s right to live in a place of their choosing continues to be important and necessary in the 21st Century.

Reasonable Accommodations & the Fair Housing Act

This is a guest post by By Rachael Deane. Rachael is a Coordinator of Systemic Investigations and Enforcement at Housing Opportunities Made Equal of Virginia, Inc. (HOME). She is a lifelong Virginian.

Imagine you are diagnosed with cancer and need radiation treatment.  The radiation causes nerve damage in your legs, resulting in a limited ability to walk.  You live in a two-story rental townhome and cannot use the staircase.  As a result, you mostly stay upstairs in your bedroom, dependent on your spouse and children to shuttle food and laundry.  When you ask your landlord to move to an accessible unit, you are told there are none available.  You ask to be released from your lease, but your request is denied.  You feel like a prisoner in your own home.  This is exactly the struggle of one HOME’s clients, who brought a complaint against her landlord for failure make a reasonable accommodation for her disability.

Fair Housing Month is an appropriate time to address reasonable accommodations, which are one of the most misunderstood requirements of federal and Virginia fair housing law.  A disability may occur because of elderliness, disease, or an unfortunate accident.  For this reason, the requirement on housing providers to make reasonable accommodations is not some esoteric legal concept, but an important gateway to opportunity that protects all Virginians.

Fair housing laws protect people with disabilities from discrimination in the rental, sale, or financing of housing (for other protections, see a previous post on fair housing issues).  Discrimination against persons with disabilities may include a refusal to make “reasonable accommodations,” which are changes or exceptions to rules, policies, practices, or services when those accommodations may be necessary to afford someone an equal opportunity to use and enjoy his or her home.  These accommodations assist a resident or applicant with a disability to take full advantage of a housing program or dwelling.

For the request to be reasonable, the person must meet the definition of disability under law and be able to show that the request is needed to assist the person in assisting, coping or dealing with his or her disability.  Reasonable accommodations must be provided free of charge to a tenant or resident, but they also must not pose an undue financial or administrative burden on the housing provider.  Housing providers must also allow reasonable modifications, which are alterations to physical premises to allow a person with a disability to use and enjoy the unit, but these are generally the financial responsibility of the tenant unless the property is federally subsidized.

Reasonable accommodations might include, but are not limited to:

  • Allowing a tenant who can no longer use an apartment due to diminishing health to terminate a lease early without incurring a penalty;
  • Permitting a service, assistive, therapeutic or companion animal in a community where pets are generally not allowed or waiving any pet deposit or rent for such animal;
  • Transferring a resident in a ground-floor unit;
  • Waiving certain guest rules or fees to permit a personal care attendant to live with a resident;
  • Designating an accessible parking space; or
  • Changing the way a housing provider communicates with a tenant, such as increasing the font size of typed documents or providing alternative notices regarding rent being due.

Housing providers frequently confuse the reasonable accommodations requirement under fair housing laws with other provisions under the Americans with Disabilities Act (ADA).  Under ADA guidance recently implemented by the U.S. Department of Justice, “service animal” is defined as any dog that is individually trained to do work or perform tasks for the benefit of an individual with a disability.  Other species of animals, whether wild or domestic, trained or untrained, are not service animals for the purposes of the ADA.  The general public is often unaware that ADA applies to areas of public accommodation only and not housing situations.  But make no mistake: fair housing laws take an expansive view of service animals because such laws address housing situations where a person’s needs are different than in areas of public access.  For those who meet the definition of disability under law and need such animals for their disability, the animals are not considered “pets.”  Therefore, they have no species or size restrictions and no special animal training requirements.  They can be allowed as long as community rules are abided.

Before the federal Fair Housing Act was amended in 1988 to include housing protections for individuals with disabilities, such persons often had no legal recourse against private housing providers who closed their doors to them.  Society has historically segregated individuals with disabilities, refusing to allow them the same chances in employment, housing, and education afforded to everyone else.  Reasonable accommodations under fair housing laws give equal access to housing opportunities for persons with disabilities so that they can use and enjoy their homes just like everyone else.

For additional information, please see HOME’s Guide for Reasonable Accommodations and Modifications (it make take a minute to open).

This April, celebrate equal access to housing for all

This is a guest post by Kate Agnelli. Kate is a Coordinator of Systemic Investigations and Enforcement at Housing Opportunities Made Equal (HOME).  She earned her M.S.W. from Virginia Commonwealth University and is a graduate of UNC-Chapel Hill.  Her background includes work in corrections and in the Virginia legislature, as well as with homeless youth in the Raleigh/Durham area.

WANTED: Tenants for spacious 3-bedroom house, $1125 per month plus one month’s rent for security deposit.  Large backyard with fence, close to shopping, some utilities included.  Extra $250 security deposit for couples with children.  Home is in a white neighborhood.  Call for more information.

It can be easy to forget that just over 40 years ago, placing an ad like the one above would have been perfectly legal.  It also would have been lawful to charge a higher security deposit to tenants with children—or simply to turn down an application because prospective tenants were not white.

On April 11, 1968, as a follow-up to the sweeping education and voting reforms made by the Civil Rights Act of 1964, President Lyndon Johnson signed into law the Civil Rights Act of 1968.  This month we celebrate Title VIII of this act, known as the Fair Housing Act.  The Fair Housing Act of 1968 prohibited discrimination in the sale, rental, and financing of housing based on race, color, national origin, and religion.

It was later amended to prohibit discrimination on the basis of gender (sex), disability (handicap), or familial status and to include design and construction standards for multi-family housing units built for first occupancy after March 13, 1991.  In addition to the classes listed above, Virginia’s Fair Housing Law prohibits discrimination based on elderliness, defined as being fifty-five years or older.  Both the federal Fair Housing Act and its equivalent in Virginia prohibit the use of discriminatory language in advertisements, like the one at the beginning of this post.

Enactment of fair housing protections had a tremendous impact across the nation.  Fair housing laws benefit everyone because they help us create inclusive communities where basic needs are being met.  Think about it: where you live affects every aspect of your life.  Do your children attend an excellent public school?  Do you have a variety of affordable grocery stores near your home that offer fresh, nutritious foods?  Are you able to take evening walks without fearing for your personal safety?  Access to services, healthy food, and a peaceful living environment are all functions of where you live.  Further, design and construction standards that create physically accessible living spaces don’t just benefit persons with disabilities—isn’t it easier for everyone to open a door with a lever handle than it is to turn a doorknob when you’re carrying groceries or laundry?

This April, we remember that the road to the enactment of the Fair Housing Act was a long and difficult one.  Congress had considered fair housing laws several times before 1968, and although fair housing was a cornerstone of the social justice platform pushed by the Rev. Dr. Martin Luther King, Jr., it had not gained a majority of votes in Congress.  The Act was pushed through Congress and signed into law shortly after Dr. King’s assassination as a tribute to his unfinished work.  Lest anyone assume that our society has passed a point where such laws are necessary, it is worth noting that Housing Opportunities Made Equal of Virginia, Inc. (HOME) received and/or documented 372 allegations of housing discrimination in 2010.  We are reminded that ensuring equal access to housing for all people has yet to be completed.

To learn more about fair housing laws, visit HOME’s fair housing page at: www.phonehome.org/fairhousing