Dec 29
The Milwaukee Journal reports that Representative Evan Goyke has introduced a series of bills to address foreclosures. The 5 bills as described by the authors are:
- Realtor Incentive Bill (LRB-3010) – This bill seeks to create an incentive for realtors to sell properties that have a foreclosure judgment and a sale value of less than $50,000. It is our hope that this incentive will attract realtors to invest more time and energy in the foreclosed home markets and neighborhoods. The bill would remove income tax reporting requirements for the commission income made by a realtor working as the agent for either the buyer or seller of the property.
- Demolition Bond Bill (LRB-2431) – This bill is designed to ensure that municipalities do not bear the financial burden of demolition of a property when the lender initiates a foreclosure action. The bill would require, as a matter of civil procedure at the time of filing a foreclosure action, that the plaintiff in the matter post a demolition bond of $15,000. The bond will be held by the clerk of courts for the county in which the foreclosure action is filed. In the event that the property is neglected, deteriorates, and becomes a blighted property in need of demolition, the $15,000 demolition bond will be applied for the cost of demolition. In the event that the property is no longer owned by the plaintiff in the foreclosure action, the demolition bond shall be returned to the plaintiff. Similarly, in the event that the foreclosure action is dismissed, the demolition bond shall be returned to the plaintiff.
- Security Lighting Bill (LRB-2774) – Under current law, mortgagees may file a foreclosure action against a borrower when the borrower meets certain criteria regarding non-payment. The plaintiff mortgagee in the lawsuit must pay a filing fee with the appropriate county clerk of courts to initiate the lawsuit. In general, these fees are used to pay the operational costs of the court. Under this bill, the filing fee for each foreclosure action is increased by $50.00 with the additional filing fee being routed by the county clerk of courts to the designated department for installation of lighting on existing abandoned homes. The lighting that shall be used shall generate and regenerate its own power through solar energy (as by definition, the existing foreclosed homes do not have electricity running to them). The lighting will help deter theft and vandalism to abandoned properties.
- HOME GR/OWN Bill (LRB-2368) – Earlier this year, the City of Milwaukee was a finalist in Former Mayor Bloomberg’s Philanthropies’ Mayors Challenge, which was a competition created to inspire American cities to generate innovative ideas that solve major challenges and improve city life. Milwaukee became one of the top finalists based on the City’s innovative idea to transform foreclosed properties into community assets that improve public health and spark economic opportunity. Unfortunately, Milwaukee was not chosen as one of the recipients of the reward, but we feel this should not deter Wisconsin from pursuing the goals of the challenge.
- Property Stabilization Bill (LRB-3431) – Current law does not allow municipalities or lending institutions the authority to enter into a property that is subject to a foreclosure action. When the property is abandoned, this may lead to deterioration of the property, which greatly decreases the property’s resale value and places additional burdens on local property tax payers. This bill seeks to extend authority to a municipality or lending institution to enter the foreclosed property and address any possible problems within the property, such as winterizing the plumbing. This bill also seeks to extend civil immunity to agents of either the municipality or lending institution engaged in the rehabilitation or repair of the property, so far as the agent is acting in his or her official capacity in carrying out actions allowable under this bill.
Something must be done to address this problem. But remember we are at this point because the government at many levels encouraged the purchase of homes by buyers who were ill prepared for homeownership and without the financial resources to weather the smallest of storms. These policies drove sales prices to unsustainable levels. We now pay the price.
At this point many of the vacant foreclosures need to be bulldozed as they have been gutted by thieves looking for a few dollars in copper to buy their next fix.
Rep. Goyke’s proposals, while good for starting a conversation, for the most part are unwise.
I doubt the IRS is on board with the non reporting of commissions.
The demolition bond has the potential of causing far greater problems than it cures. Already today banks are refusing to take possession of foreclosed properties. Many owners believe they were foreclosed upon and moved out only to find the city hunting them down for fines and fees because the banks never took possession. One such case, Bank of New York v. Carson, recently was heard by the Court of Appeals.
We;ve already seen cases where the lender has sued on the note, but as civil cases rather than foreclosures, leaving the title in the buyer’s name along with the liens for mortgages and the court judgments. Mr Goyke’s proposed bond will cause more incentive for banks to do this, creating a larger amount of Zombie housing, i.e. housing that can never be sold due to the liens and title problems.
I do however like the proposal to install solar powered security lights, if they are vandal proof.
Dec 26
Our company buys a lot of products from Amazon – from office supplies to maintenance parts to bug spray.
We do this for no altruistic reason, Amazon is less expensive and faster for many items. Amazon Prime rocks if you buy even a modest amount!
Amazon has a really cool program where they give 1/2% of your purchases to a charity of your choice. Our company chose Children’s Hospital of Wisconsin. Children’s does good work and have helped my granddaughter as well as many thousands of other kids.
If you are an Amazon user, I would encourage you to sign up and let your purchases help an organization you believe in. If you are lost for a worthy charity – Children’s Hospital of Wisconsin is a great choice.
More info at:
http://smile.amazon.com/
Dec 21
A member of the LandlordAssociationOrg Yahoo Group asked:
I’m considering investing in residential real estate and becoming a landlord. If I proceed down this path I would be inclined to buy a house rent it, learn, then buy a bit more every year. So I need some advice:
My inline reply
1. Is it a good idea?
I bought a duplex in December 1977 when I was 21, another in November 1978. A couple in the spring of 1979 and a few more before that year ended. By May 1981 I had 70 units and quit my fairly good job. I have had a paycheck that did not bear my signature since. Today we employee around 30 people in two states.
2. What do I need to know?
Everything you possibly can learn at someone else’s expense rather than making expensive mistakes yourself. 😉
Start with learning landlord tenant law and small business management. Not knowing the law will cause you to fail. Not thinking of this as a business will cause you to under perform and over work.
3. Any books or courses you recommend?
- Any books by John T Reed that interest you. They are the ones I wish I wrote.
- The E-Myth by Michael Gruber
- Landlording by Leigh Roberson
- An oldie (first edition 1959) but goody is How I Turned $1,000 Into a Million: In Real Estate in My Spare Time by William Nickerson. It is not the path I took, but the principal is sound.
4. Any organizations I should join?
Any local landlord group or apartment association. Try a few and see where you fit in best. I attribute a lot of my success to being an active board member of the Apartment Association of Southeastern WI. I have been on the board all but two years from 1989 to today.
Being active in the association you choose is the key as you will learn of opportunity and risks before most of the rest of the industry. It will also speed up your learning of the laws that affect your business.
Dec 12
SB 179 was signed by Wisconsin Governor Scott Walker today and is now Wisconsin 2013 ACT 76.
The legislation affects evictions, towing, municipal ordinances, responsibility for bed bugs and other insects. Most importantly it allows for crime free lease addendums. I believe that the effective date for most of the statute is March 1st.
We will need to modify our leases to comply with or receive the advantage of some of the provisions.
Dec 05
Deco Drive, an East Coast show similar to Entertainment Tonight and TMZ, aired a segment last night featuring my wife’s, Carmen Ballering, couture fashion created out of uninflated balloons. This was a ramp up to Carmen’s Art Basel exhibit that starts in a couple of hours.
Here is a clip:
WSVN-TV – 7NEWS Miam Ft. Lauderdale News, Weather, Deco
Dec 03
Four years ago I wrote of a scary trend I saw emerging, Zombie Housing. These are homes that lenders begin foreclosures on but never take title. This leads to homes that cannot be sold due to the liens upon them. While these houses sit vacant they are vandalized beyond repair. Yet the owners, who think they are the former owners, remain on the hook for city fines, taxes, demolitions and liability for injuries.
No one paid much attention to this. However this past week the Wisconsin Court of Appeals issued a recommended for publication decision in Bank of New York v. Carson to address foreclosed, abandoned properties and force their sale upon expiration of a five week redemption period.
¶16 In sum, because the trial court had the authority pursuant to WIS. STAT. § 846.102 to amend the judgment to find the property at 1422 West Concordia Avenue abandoned, and because the trial court had the authority to order a sale of the property upon the expiration of the statutorily designated redemption period, we conclude that the trial court erred as a matter of law in deciding that it did not have this authority
In the short term this ruling will put a lot of properties on the market, most of which have now been stripped of all value and will ultimately face the bulldozer.
A current question is “Are banks required under current law to take title if no one bids at auction?” If the answer is yes I will assume a lot of banks will do the reasonable thing from their perspective and not foreclose on mortgages if the property is abandoned and of little value. Instead they may sue for a money judgement on the note. I’ve seen cases where banks have done this on near Northside rental properties. The banks can also simply do nothing and abandon their interest or issue satisfactions on nonperforming loans on abandoned properties and wash their hands of any legal responsibilities.
If the banks respond in this manner it will make the problem much worse and it is unlikely current legislation can hold the bank to the financial responsibilities of those properties if they do not foreclose.
Reuters had an interesting article on Zombie Housing that was referenced by the Court of Appeals.
So the foreclosure crisis is far from over in areas where property values are low and city regulation of lenders in possession are tough.