State tax authorities are getting into the game, too. When IndyMac foreclosed on Richard Chavarry’s house in Victorville, Calif., in 2008, he had already relocated to Los Angeles to escape the 130-kilometre commute to his job. The renters he had initially relied on to help him keep up payments on the Victorville house were long gone, too. But he had no idea that IndyMac cancelled the sale in October 2009. “They never notified me,” Mr. Chavarry said.
Nearly two years passed before Mr. Chavarry started getting citations in the mail for code violations from the city of Victorville. In February, the California Tax Board seized his $631 tax refund to pay the city back for the costs of scrubbing graffiti, removing tumbleweeds and boarding up the windows of Mr. Chavarry’s house.
In March, Mr. Chavarry filed a deed in lieu to try to get IndyMac, now owned by OneWest Bank, to take back the house. The bank rejected it. Mr. Chavarry still owes the county $5,731 in back taxes and fees for housing-code violations.
IndyMac declined to comment.
Once a bank walks away from a foreclosure, the real rot begins. Living rooms turn into meth labs. Falling shingles menace passers-by. Squatters’ cooking fires turn into infernos. The latest iteration of the trend: gas explosions.
Electric companies usually shut off the juice when homeowners tell the utility they are moving. But natural-gas companies usually don’t. In recent months, abandoned homes have exploded in Chicago, Cleveland and Bridgeport, Conn. In all cases, foreclosed homeowners had moved out. With no one home to smell the gas, it went undetected – until the houses blew.
“We are seeing more and more close calls,” says Mark McDonald, a former natural gas public safety worker who now runs the New England Gas Workers Association. “These houses are a formula for disaster.”
Cities are struggling to find ways to cope with growing numbers of blighted properties. Miami, Detroit and Las Vegas have created registries intended to force banks to take more responsibility for vacant houses.
The Mortgage Bankers Association has opposed these measures. Placing “unreasonable” and “onerous” requests upon servicers will only hurt the already ailing mortgage-lending business, the association says on its website.
The association did not respond to repeated requests for comment.
Registry advocates say the banking industry’s opposition has helped water down some of those actions, such as a recently enacted Georgia law that requires banks to register vacant properties only after a foreclosure has been completed.
A vacant-property ordinance in Los Angeles requires banks to register a house as soon as they file a default notice. Failure to do so could result in a $1,000-a-day fee. However, “it’s not being enforced,” says Los Angeles Assistant City Attorney Tina Hess. “Part of the problem in L.A. is the building and safety departments have been cut so severely they don’t have the inspection staff to monitor these properties.”
‘To hell and back’
In Columbus, Ohio, Joseph Keller recently paid a visit to the empty house on Avondale Avenue. In the living room, the floor was littered with dirty diapers, pill bottles, condoms, sooty mattresses and soda cans. In the kitchen, squatters had hung pink curtains.
“They tore it to hell and back,” Mr. Keller said, kicking at a dirty mattress. “We never would have left the home if we weren’t told to get out.”
The Kellers live in their daughter’s dining room, where their queen-size bed leaves little room to manoevre. Joseph can’t sit, stand or sleep for more than 15 minutes at a time. He can’t take pain medication because of his diseased liver. Every few months, he makes a trip to the emergency room, where doctors drain his abdomen of excess fluid.
Last May, Chase’s debt collector, Professional Recovery Services, sent Mr. Keller a letter: “At this time,” it said, “we are able to offer you a settlement of $25,258.41 on this account to be paid within 15 days.” He lacks that kind of money, as well as the $11,759.08 he owes to the county in back taxes.
Professional Recovery Services declined to comment.
At a hearing in early December, a Social Security administrative judge told the Kellers that he would review their appeal of the original denial of benefits, a process that he said could take two months. Joseph Keller responded that he might not be around that long. Earlier this month, the judge sent the case back to the local office after it determined that the house was virtually worthless. Mr. Keller still has no benefits.
A Social Security Administration spokesperson declined to comment on the case.
“He’s dying,” says Mr. Keller’s daughter, Barbara. “He needs his name off this house.”
Follow us on Twitter: