Who owns that dirty, foreclosed house? It's complicated

Article and Video Courtesy of The Sun Sentinel

By Megan O'Matz

Published May 2, 2012 

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In the tsunami of South Florida home foreclosures, there's an additional complication for authorities trying to deal with neighborhood squalor. It's often hard to determine exactly who owns a house and is legally responsible for maintaining it.

A single mortgage may involve several banks or companies one that made the loan; another that "services" the loan by collecting payments; and another that funnels payments to yet another bank, or "trustee," that disburses proceeds from mortgage payments to investors of loans bundled together as mortgage-backed securities.

Add to that the recent wave of bank closures and mergers, and you've often got a jumble of corporate entities.

Towns have struggled to unravel this chain of relationships to force the banks to act.

"It's a legal nightmare to figure out who is responsible," said Raquel Diaz, code compliance manager for Lake Worth.

For example, a house may be titled to "Deutsche Bank c/o Saxon Mortgage Services Company." Deutsche Bank is a German firm that acts as a "trustee."

Saxon before being sold to Ocwen Financial Corp. serviced loans as an arm of Morgan Stanley.

Generally, banks that act as "trustees" hold title but say upkeep on a vacant home is the job of another bank or company the loan servicer.

Code enforcement officers, by law, must cite the owner of record for violations of health and housing standards. But getting a place cleaned up requires actually reaching the right party.

Notices of the infractions, with deadlines for compliance, often are tacked to doors and windows, making some vacant homes look like bulletin boards.

Copies are also sent by certified mail to the homeowner listed in the county Property Appraiser's records.

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As a result, South Florida bureaucrats commonly send dispatches about mosquito-laden pools and tall weeds to faceless bankers in such far-off places as Plano, Texas, or Rancho Cucamonga, Calif.

"A lot of times they ignore the notice or say [the property] doesn't belong to them or that they're only partially an owner," Diaz said. "They themselves don't even know."

When a Fort Lauderdale code inspector wanted to contact Washington Mutual Bank in July regarding an overgrown lawn and debris at 2021 NW 11 Ave., the official couldn't find a telephone number for the bank.

"This institution is in the process of being liquidated and or absorbed into another banking institution due to the ongoing mortgage related issues currently plaguing the nation and the banking system," the inspector wrote.

About 35 cities in South Florida and the three counties now require banks and lenders to register the address of vacant homes under foreclosure and provide the name and phone number of an appointed contact who can deal with maintenance issues.   


Registration can cost lenders between $100 and $200 a year per property. Some cities handle registration in house while others contract the task to private companies, such as http://www.vacantregistry.com .

Even after registration, the number of players involved and their varying roles can be confusing.

For two years, CoreLogic, a California firm that disburses escrow funds for lenders, has been paying the property taxes on a foreclosed house in Fort Lauderdale. Yet CoreLogic is not the owner of the home or responsible for its care.

The company was contracted only to pay the taxes.

Because of confidentiality agreements, CoreLogic spokeswoman Alyson Austin said: "I can't tell you which bank we're working for."