Archive for January 22nd, 2011

January 22nd, 2011

Foreclosed properties as a source of revenue

by DickH

At last Tuesday’s meeting, the Lowell City Council by a 5 to 4 vote rejected a joint motion by Bud Caulfield and Rita Mercier to “allow Sean Burke to address the City Council regarding a plan for vacant/foreclosed homes.” Today, both Gerry Nutter and the Lowell Sun editorial have written critically of the council majority for not allowing Burke to speak. Rather than commenting on that decision, I thought it might be helpful to provide some background on the underlying issue: whether the city’s foreclosure crisis presents a revenue-raising opportunity for the city.

To follow the issue, you first have to understand some of the intricacies of Massachusetts foreclosure law and practice. When a homeowner falls far enough behind in his monthly payments, his lender will initiate a foreclosure by filing a lawsuit in the Land Court under the Service Members Civil Relief Act, a statute that provides added protection against foreclosure to homeowners who are serving in the military. The only issue to be decided in this court case, therefore, is whether the property owner is in the military. Due process requires that the homeowner receive adequate notice of the lawsuit, so the Court issues an Order of Notice that must be (1) served on the homeowner, (2) published in the newspaper, and (3) recorded at the registry of deeds. Since the vast majority of homeowners are not serving in the military, these lawsuits almost always end with a judgment in favor of the lender which authorizes the lender to proceed with the foreclosure. This ends all judicial involvement in the foreclosure process.

It is important to understand that an Order of Notice does not guarantee a foreclosure. If the homeowner is able to work out a modification agreement with the lender, refinance, or sell the property, the Order of Notice becomes moot and no foreclosure auction is ever held. In most cases, the Order of Notice does ripen into a foreclosure auction. That auction typically occurs approximately 90 to 120 days after the Order of Notice is recorded at the registry of deeds. The auction occurs on the property that is the subject of the foreclosure and the property is sold to the high bidder. In 90% of all foreclosures, the high bidder is the same lender that is conducting the foreclosure. Since lenders are not in the business of owning real estate, they do put the property on the market. To enhance the prospects of a sale, the lender also evicts everyone from the house, leaving it vacant until a new owner is found. Unfortunately, the average foreclosed property remains on the market for 9 months until the sale to a new owner is consummated. During that lengthy period of vacancy (which is even longer if the homeowner/borrower abandoned the property prior to the auction), the house becomes a crime-magnet, dragging down the value of all other properties in the neighborhood. read more »

January 22nd, 2011

Patrick Term II Starts Strong by Marjorie Arons-Barron

by Tony

The entry below is being cross posted from Marjorie Arons-Barron’s own blog. Check it out.

Good news coming out of this morning’s speech by Deval Patrick to the Mass. Municipal Association. He will be filing legislation to require cities and towns to provide public employee health insurance either by joining the state’s Group Insurance Commission (GIC) or devising a similar plan on their own. This was something Republican Charlie Baker had urged during the gubernatorial campaign that the Governor had flirted with, but danced around, perhaps concerned about alienating labor support.

Now he’s doing the right thing. City and town workers’ health insurance takes a huge bite out of city budgets, in some cases over 20 percent. That comes right out of property taxes and, hence, out of taxpayer’s pocketbooks. In some cases, those same taxpayers are underwriting a level of health benefits for public employees that those taxpayers don’t even enjoy themselves. The Boston Foundation found that “these health benefits are among the most generous offered by any employer in the Commonwealth, including the state and federal governments, as well as private employers!”

That same report noted that Boston alone could save more than 17% or $45 million if its workers got coverage through the state’s Group Insurance Commission. Statewide, there would be tens of millions of dollars saved. That’s crucial since the state’s need to lop $1.5 billion off next year’s budget means that everything will be on the table, including local aid.

Boston Mayor Tom Menino is trying to rationalize health insurance by home rule petition, but that, too, needs legislative approval. Let’s hope that such sanity prevails. If local communities can’t achieve savings in their health insurance, that will mean laying off police, firefighters, and teachers, some of the unions who are fighting to preserve their laughable $5 co-pays and scant 20% share of premiums. The Governor’s proposal recognizes the fairness of linking what city and town workers get for health insurance to the level of benefits that state workers enjoy! read more »