Foreclosure abuse. What the big banks agreed to settle for in Ohio.
Attorney General Mike DeWine joined a $25 billion federal-state settlement agreement with the nation’s five largest mortgage servicers – Ally/GMAC, Bank of America, Citi, JPMorganChase, and Wells Fargo - over foreclosure abuses and fraud, and unacceptable nationwide mortgage practices.
Ohio’s estimated share of the 2012 settlement - $330 million.
• Ohio borrowers will receive an estimated total of $102 million in benefits from loan term modification and other direct relief.
• Ohio borrowers who lost their home to foreclosure from Jan. 1, 2008 through Dec. 11, 2011 and suffered servicing abuse would qualify for a total $ 44.9 million in cash payments.
• The value of refinanced loans to Ohio’s underwater borrowers would be an estimated total of $90 million.
• The Ohio Attorney General’s Office will receive $93 million to help with foreclosure prevention, revitalizing neighborhoods by getting rid of blighted properties, education for homeowners and prosecution of mortgage rescue scammers.
Source: Ohio Attorney General
This story is the first of a two-part series on the lingering impact of the housing crisis in Dayton. Read the second story in the series in Thursday’s Dayton Daily News and on MyDaytonDailyNews.com
In August, Ohio had the third-highest foreclosure rate in the U.S.behind behind Nevada and Florida.
Foreclosure filings so far in 2013:
Greene County
2013: 375
2012: 534
Montgomery County
2013: 1,841
2012: 2,710
Preble County
2013: 169
2012: 211
Warren County
2013: 630
2012: 798
SOURCE: County clerks of courts
Dean and Barb Pleuss are the pebbles left behind by the mortgage landslide that carried away homes, people and wealth.
So, in their own way, are Edgar Hernandez and Sherry Smith.
All are connected to abandoned homes that are nearly uninhabitable because of major problems linked to the abandonment — a decrepit roof that lets in water or plumbing that’s been ripped out by scrap metal scavengers.
Local housing experts say they are among hundreds in the area who live like refugees in homes that have been through hell and now provide bare minimum shelter to people who can ill afford to fix or maintain them.
Taxpayers end up paying one way or the other.
One remedy is eviction and the bulldozer. But typical demolitions cost about $10,000, and condemning a home can throw people into the street and make them further dependent.
If residents get evicted, the homes will likely morph into harbors of crime and drive down property values even further.
Getting small loans from banks can be nearly impossible, applicants say, and public funding has mostly dried up along with private charity for repairs. The inhabitants scrape by on their wits and what help they can summon from family, friends and neighbors.
Some use umbrellas indoors when it rains. Others drape tarps on roofs. Neighbors might provide water, a church might supply food. Failing roofs, wiring and plumbing ripped out by illegal scrappers, or missing furnaces and malfunctioning water heaters, add up to the most common problems.
Shy of a $1 million or more donation from an angel benefactor, the problems are adding up to a long-term struggle for the region, said Stephanie Evans of the Dayton Fund for Housing Rehabilitation, a small nonprofit housed at the Miami Valley Regional Planning Commission.
The fund released $107,000 in 2012 for emergency repair loans, but demand is many times that. The fund is now being reorganized and will likely link with another nonprofit dedicated to housing rehabilitation, Evans said.
“Funding dried up, nobody has it,” Evans said. “Now you have people in homes in that condition and nobody is able to deal with it. Compounding the foreclosure crisis, banks did not secure homes and they are stripped of plumbing, electric or furnaces.”
The Pleusses this year became owners of a so-called “toxic asset” home at 108 E. Parkwood Drive in Dayton. They moved there in 2008, agreeing to pay $300 a month for a home with a complicated history that includes foreclosure, sheriff’s sales, and its purchase at a Fannie Mae auction for $6,300 by a Utah bargain hunter. This year, the deed was surrendered to the couple and the Utah company is out of business. In reality, though, not much has changed.
This newspaper began following the Pleusses not long after they moved into their house by breaking in — they were told to do this by the Utah investor who bought the home sight unseen. There was never a key. The two moved into the home on a “rent-to-own” basis after being homeless and searching desperately for a roof over their heads.
Today, the roof is still falling apart and the Pleusses are threatened with eviction by the city. Vacant homes dot the block. Dean, 44, is recovering from surgery, and can’t do strenuous labor. They’ve only Social Security disability payments to survive on. “I just need somebody to help fix my roof,” he said.
Kelly Camp, 34, is the neighbor across the street who helps out by providing water to drink.”They’re sweet people,” she said. “They really do need help.”
Sherry Smith, 65, lives 10 minutes away at 204 Klee Ave., a two-story with failing house and garage roofs. The retired mother of four has a fixed income of $750 a month and a credit rating of around 600. Still, she hasn’t yet managed to secure a loan. Her son bought the house for her for $8,000.
With family help, she’s replaced copper pipes ripped out by scrappers with plastic pipes. The house was vacant for a decade or so, with the exception of squatters. She thinks the rest of the work can be done for $5,000.
Smith’s latest hope is church-affiliated St. Helen Federal Credit Union, which offers low-interest loans.”It’s terrible when you are poor,” she said. “I could easily handle a small loan, if someone would give it.”
Then there’s Edgar Hernandez, 50, who left his two-story, three-bedroom home on North Main Street in Dayton two years ago under threat of foreclosure. Problem is, no one took legal possession of the house, and he has remained the legal owner.
On a disability retirement after a 20-year-career as a school bus driver, Hernandez now faces thousands of dollars in repairs after scrappers looted the vacated house of copper pipes, electrical wire and even bathroom fixtures. Hernandez, who bought the house in 2000, said he lives on the $1,450 in monthly disability payment and has a credit rating of 410. He rooms with his 73-year-old mother, who is hospitalized.
“I got the notice and got scared and left,” he said. “Now, it’s just a shell and there is nothing left.”
Now that the house is his again, he can’t get a bank loan to make it fit for occupation. “I don’t know what to do with it.”
If there’s any hope to be found, it could be in the form of settlements between a coalition of housing groups including the local nonprofit Miami Valley Fair Housing and various banks.
A settlement this year with Wells Fargo Bank netted $42 million for 44 local communities. The settlement is the upshot of a complaint the groups filed with the U.S. Department of Housing and Urban Development over how Wells Fargo failed to maintain properties it foreclosed on.
The complaint alleged Wells Fargo maintained and marketed the properties “in a state of disrepair in predominantly African-American, Latino, and other non-White communities” compared to properties in predominantly white communities, which were “in a materially better condition.”
James McCarthy, President of Miami Valley Fair Housing, said $1.4 million will be distributed in a program his nonprofit set up with Wright-Patt Credit Union. By Jan. 1, grants will be offered for repairs or down payments for homes in the 45417 and 45426 Zip Codes. Other complaints are pending against Bank of America and U.S. Bank.
Amy Radachi, President and CEO of Rebuilding Dayton Together, oversees 200 home repair projects annually. The group is dedicated to helping the elderly stay in their homes. But more calls come in from younger people who simply can’t afford to fix a home purchased at low cost.
“We see that every single day,” she said. “They say the American dream is to own a home, but there is the upkeep and maintenance that never goes away.”
James Thurston, spokesman for the Ohio Bankers League which represents a range of banks from small community institutions to national banks like Chase, said improving real estate conditions could help relax lending restrictions in time.
Thurston said a lengthy state foreclosure process places homes in limbo for lengthy periods, making them vulnerable to looters. Legislation sponsored by the industry group could help remedy that, he said.
“You have to limit the opportunities for the properties to be vandalized,” he said. “No bank makes money on foreclosures.”
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