Thursday, August 21, 2008

Dohoney says City collections against banks 'successful'

Increased enforcement action by the Cincinnati Health Department and the City's Department of Community Development Property Maintenance and Code Enforcement Division has proven successful, according to a report by City Manager Milton Dohoney Jr.

The report is in response to a March motion by Councilmember Laketa Cole asking the City to begin fining banking institutions that are not keeping their foreclosed properties up to code.

Dohoney says that administrative hearings on building code citations are conducted by the Law Department's Office of Administrative Hearings (OAH), established in 1996.

The number of citations handled by OAH began to increase in 2004.

"A total of 1,149 citations were issued during this time period," Dohoney says, referring to the period between the establishment of OAH and today.

But through July 2008, 651 citations had not yet been paid.

"In some cases, the payment of fines and abatement assessments occurs relatively easy," Dohoney says. "For example, fines and abatement assessments are often paid when title companies close out a particular case and transfer the property. OAH receives telephone calls and e-mails on a daily basis from title companies inquiring about outstanding fines on properties that are undergoing transfer. OAH then facilitates the payment process by providing the title company with a copy of the default notice and, subsequently, the title company will pay the outstanding amount."

However, Dohoney points out that the collection of fines and assessments can be problematic in certain situations.

"Determining the rightful owner or responsible party can be difficult during the pendency of foreclosure proceedings," Dohoney says. "Moreover, because the Hamilton County Auditor's records are not dispositive of ownership due to irregularities in how they are updated, more research and analysis of the foreclosure proceedings is needed to identify the responsible owner or person in control of the property."

Dohoney also says that financial institutions often require City assistance in determining if they owned the building at the time of the citation.

And, of course, there is always the issue of paperwork and office bureaucracy.

"Once the City issues violation notices or orders to a financial institution, much time may pass before the appropriate department within the financial institution responds to the City," Dohoney says. "During the interim, it is not unusual for the City to have undertaken its own abatement procedures."

In an effort to step up compliance, Dohoney says that OAH refers a number of outstanding cases to the Claims and Collections Section of the Law Department, which has collected approximately $20,000 in outstanding fines in the past year and a half.

"Further, as the attached report indicates, collection actions are currently pending against various financial institutions, including Freddie Mac, Fannie Mae, Deutsche Bank Trust Company, Wells Fargo, Bank of America, ABN, JP Morgan, and LaSalle," he says.

The enforcement and collections process isn't successful enough for Price Hill, which led the City with 300 homes in foreclosure last year.

In July, the non-profit community development agency Price Hill Will filed a lawsuit in Hamilton County Common Pleas Court against Deutsche Bank and several other commercial lenders.

Specifically, the lawsuit alleges that the bank's failure to maintain properties at 431 Considine Avenue, 1104 Carson Avenue and 1029 Beech Avenue is driving homeowners away and hurting surrounding property values.

Deutsche Bank claims that they aren't responsible because they don't own the properties, but act only as a trustee for investors who buy the properties.

County records show that the bank was the owner of record, having purchased the loans and acquired all three properties as a sheriff's sale.

1104 Carson Avenue has since been sold to a Bloomington, Indiana investor for $6,000.

Dohoney's report will be reviewed by council's Vibrant Neighborhoods Committee at their meeting on September 3 at 3 PM.

Photo credit: "Sign Of The Times - Foreclosure" by Flickr user respres