DAYTON — The house at 24 Glencoe Ave. looks bad on the outside.

The red trim of the vacant two-story house off Wayne Avenue is faded and peeling. The false brick siding and roof are deteriorating. A broken blind hangs askew in a front window. The small front lawn is a mess and graffiti festoons a wooden fence along the side of the property.

The house has drawn complaints from neighbors, and John Carter and two other Dayton housing inspectors are here to see just how bad it is inside.

Around back, the porch is overgrown with weeds and the glass is broken out of the back door. Because it’s open to the outside, it’s legally an unsecured house, and they can go in to inspect.

What are they looking for?

“As many violations as we can find to build a case for putting it in the nuisance program,” Carter says.

Carter has been tracking this property — a bank walkaway — since 2005. He’s become the city’s expert in tracking down owners of vacant properties, a difficult task in the era of mortgages sold and resold to investors. Through savvy use of computer databases and developing hundreds of contacts in the default mortgage industry, he’s tracked ownership of thousands of vacant homes, and gotten lenders and owners to secure and maintain the properties.

Over the last five years Carter has saved the city more than $50,000 in costs for boarding up vacant houses alone. He’s received nationwide recognition for his efforts, winning Governing magazine’s 2008 Public Official of the Year award.

The case of 24 Glencoe, however, is a difficult one.

The house was purchased in January 2003 by the current owner, Donald Hennessey of McMurray, Pa. By October 2004, a foreclosure case had been opened, and Homecomings Financial Network, Inc. — which is owned by GMAC — was granted a foreclosure in March 2005. The property was ordered for sale at sheriff’s auction the following month.

Everything appeared to be on track until the appraisal required for a sheriff’s auction came in at $30,000 — well under the $71,792 that was owed on the mortgage. The sheriff’s sale was canceled in May and a few days later the lender dismissed the foreclosure.

So even though Hennessey thought the house had gone back to the bank, he still owned the vacant and abandoned property — and was on the hook for the growing property taxes and zoning fines from the city.

Carter tracked the Hennesseys down in Pennsylvania and was told the couple had purchased 17 propertiesin what they described as a housing scam. A number of such scams have been prosecuted in federal court in recent years. They denied they still owned the house and even hired a lawyer to tell the city they no longer own the property.

“I said I was sorry to inform them that the bank stopped the foreclosure, discharged the loan and never took title to the property, so it’s still theirs,” Carter said.

Meanwhile, going to court to force the Hennesseys to maintain the property is difficult — and potentially expensive — because they live out of state. So neighbors and the city are left to pick up the trash on a 95-year-old house that’s been sitting vacant for at least four years.

Inside the house

Alan Carr, a conservation specialist with the city’s housing division, removes a nailed up door and the team goes inside.

Plaster and paint from the walls and ceiling cover the floor. The kitchen sink is missing. Thieves have also stripped the copper wiring and pipes. Children’s toys — a stuffed monkey, a rusting miniature fire engine, among others — litter the floor. So do dead birds.

“At one time this was definitely one of the nicer homes in the neighborhood,” Carr said, looking around at the damage. “It has an entrance area. It has a living room with a fireplace, a separate dining room area. It has a huge kitchen.

“The whole deal is almost criminal.”

The team walks through the house, totaling up the damage.

“Walls and ceiling deteriorated throughout. Paint peeling throughout. Floor covering damage throughout,” Carter intones. “Plumbing fixtures missing. Kitchen cabinets damaged and deteriorated. Plumbing damaged and deteriorated throughout. Doors not properly operable. Windows missing. Locking devices not working. Windows not working properly.”

After the inspection, what does Carter think?

“I’m hoping they tear it down as soon as possible,” he says.

So does Glen Clark, who has lived two houses away, on the corner of Glencoe and Wayne, for 40 years.

“It’s kind of sad,” Clark says, shaking his head, “because 12 years ago there was a woman living there, a young professional, and she kept it immaculate.”

Clark and his wife, Susan Brockman, have the dubious honor of having two walkaways within spitting distance. The other is next door on Wayne.

“It’s such an eyesore,” Clark says.

Clark and Brockman have been calling the city about both properties, and just want them gone. They’re too broken down to make rehabilitation pay off, he said.

It’s hard to say if the two derelict houses have specifically devalued his home, Clark admits. Property values have been declining in the whole area.

“But I’m sure if I wanted to sell my house with that property next door, it would hurt the sale value of the house,” he says.

Why they walk away

Ironically, that same thinking — that sinking values make homes in the area less marketable — leads to the decision by lenders to walk away.

Mortgages are usually sold to investors, often through bundled securities, and investors have to weigh the costs of holding onto a property against its future value, said Jeannine Bruin, a spokeswoman for GMAC, which owns Homecomings Financial.

“Most of the loans we originate are sold to an investor,” Bruin said. “If it looks like we hold the title, we’re probably holding title on behalf on an investor.”

And the investor has to pay Homecomings fees for administering the loan, foreclosing if necessary, legal fees, fees for property maintenance, fees to market the property, fees to repair the property so it’s in marketable condition.

While Bruin doesn’t know the details of the Glencoe house, at some point, she said, the investor gets to a breaking point.

“The investor may say, ‘Oh gosh, this is a neighborhood where there are a lot of foreclosures, home prices are falling, and I’m going to incur all these fees to follow through with this foreclosure. Plus there are all these unpaid property taxes. How much am I really going to get if I continue with the foreclosure? I’m probably going to lose money.’ ”

In a case like that, she said, the investor may decide to halt the foreclosure sale but reserve the right to foreclose at a later date, maybe when the market recovers.

That’s exactly what happened at 24 Glencoe. Homecomings dismissed the foreclosure “without prejudice,” meaning it still holds a lien on the property and can come back to foreclose later.

Housing advocates, city officials and attorneys say the profit-motive strategy is not only doing terrific damage to urban neighborhoods, the benefit to the investor is hard to see.

“I don’t see any logical pattern industrywide to what they’re doing,” said John Ebersole, a Miamisburg attorney who works with real estate.

If a house, such as the Glencoe house, isn’t worth bidding on at sheriff’s sale, he said, it’s not going to be worth more after it sits empty for two years and is stripped by thieves.

“What are they thinking?” Ebersole asked. “It just makes no sense.”

And because the investors usually won’t release the lien, nobody has incentive to fix the property.

“If you go to them and ask them will you release the mortgage — I’ve done it several times — and they say no,” Ebersole said. “So then what do you do?”

Possible solution?

State Rep. Dennis Murray, D-Sandusky, has some ideas. He’s preparing a bill that would give lenders a set amount of time — say, 60 days — after filing a foreclosure on an abandoned property to do something with it or be stripped of their legal interest in it. Other provisions of the bill give judges more leeway in dealing with foreclosure cases.

Murray, a practicing attorney and a former Sandusky city commissioner, said his experience in city government helped him see the problem.

“You’d have weeds and abandoned cars or whatever at a property, and you couldn’t get anyone to take action,” he said.

He said he’s optimistic he can get the bill passed.

“It’s clearly needed,” he said. “You don’t have to go through but a single urban community these days — and, frankly most older suburban communities — to see there’s a real problem with these walkaways.”

Stuck with a walkaway

Such a bill might have spared Jacqueline Buford and Angel Borger a lot of pain.

Buford and her husband, Melvin, got caught in a predatory loan to have their roof fixed, said Randy Smith, an attorney with the Predatory Lending Solutions Project at the nonprofit Miami Valley Fair Housing.

When the adjustable rate began going up, Buford said she and her husband couldn’t afford the payments on their fixed income, and they turned to Smith for help.

After two years, Smith reached an agreement with Wells Fargo Bank to release the Bufords from the loan and foreclose on the property. But the bank then canceled three straight sheriff’s sales of the property.

In the meantime, the Bufords, who had moved out, began getting notices from the city about cutting the lawn and maintaining the property.

Jacqueline Buford said they thought the notices were a mistake. “We thought the house belonged to Wells Fargo.”

In June the city issued a warrant for her husband’s arrest for failing to appear in Dayton Municipal Court on code violations, including not mowing the lawn.

Finally, after pressure from Smith, Wells Fargo had the sheriff’s sale rescheduled and on Oct. 9 it bid on the house, releasing the Bufords from future responsibility. However, they still must pay fines and court costs.

“It caused a lot of headaches,” Buford said. “They wouldn’t let me keep the house. If it’s not my house any more, why should I be responsible for it?”

Borger, a 37-year-old single mother who now lives in Trotwood, got caught up in a real estate scam similar to the one that got the Hennesseys. She signed for 10 homes with the understanding that the sellers would make them ready for rental.

But the sellers never did. Six people eventually pleaded guilty in federal court to various charges in the case, which affected 210 residential properties.

The banks foreclosed on all of Borger’s properties except a stripped and deteriorating house at 800 Faulkner Ave. in Dayton. She owes $57,000 on a house that was appraised in 2005 for sheriff’s sale at $18,000. But it’s not worth that now.

“I absolutely don’t know what to do,” Borger said, standing in the unmowed front lawn of the boarded-up home. “If it was in livable condition, I would come and live in it myself. But the roof is caved in. It leaks real bad. There’s no toilets. No kitchen sink. It’s not livable at all.”

“It was my stupidity,” she said ruefully. “I was so naive.”

Now Borger is just hoping the city will come through with a wrecking ball.

“Seriously, they ruined my life,” she said of the sellers. “I gained a lot of weight, went through a lot of stress. I lost a lot of sleep over this.”

Contact this reporter at (937) 225-2393 or kmccall @DaytonDailyNews.com.