RETURN TO CURRENT ISSUE

CHICAGO--Through a series of meetings with Federal Housing Commissioner William Apgar, HUD staff, and the contractors hired by HUD to maintain and sell HUD's 40,000-plus abandoned homes, NPA groups determined that mortgage lenders play a big role in the maintenance problems.

These maintenance problems range from mounds of trash rotting under porches and in yards to unsecured buildings that attract drug dealers and other criminals.

After foreclosing on a family mortgage lenders are required by HUD to "preserve and protect" these properties until conveying them to HUD's maintenance and management contractors. However, many mortgage lenders are not preserving and protecting these properties, but instead leave them un-boarded and unsecured, open to vandalism and worse. Weeks or even months later when HUD acquires the property, it is already a wreck, assuring that the house sits in HUD's inventory and in the neighborhood, where it deteriorates even further until it needs to be demolished.

Neighborhood groups are demanding that HUD enforce its Preserve and Protect requirements and penalize mortgage lenders who do not take care of their properties in our neighborhoods. Apgar has already agreed to take the first step. He said HUD will send a Mortgagee Letter to all FHA lenders summarizing lenders' responsibilities to take care of their foreclosed houses and that they will be penalized if they do not adhere to these requirements. HUD has the authority to refuse to accept houses from lenders that do not adequately maintain their foreclosed houses.

When HUD or their contractors refuse to accept these houses, the lender loses their FHA insurance claim, which can cost the negligent lender more than $100,000 per house.

Currently, Golden Feather Realty Services, HUD's maintenance and marketing contractor for the Midwest and the Northwest, has refused to accept 10 houses from six negligent lenders, costing those lenders close to $1 million so far this year. Lenders like Countrywide, for example, who have a bad reputation for property maintenance, have lost nearly $350,000 for not adhering to HUD's Preserve and Protect guidelines.

NPA groups are also following up on the wins announced at this year's NPA conference. The new and bigger property management signs that NPA groups in New York, Ohio, Indiana and Illinois demanded from HUD last year were presented by Apgar during the NPA conference, but then we never saw them posted on any of HUD's 40,000 abandoned buildings in our neighborhoods.

After a follow-up conference call with Apgar's staff and a meeting between HUD staff and Golden Feather Realty Services here in Chicago, we are beginning to see these new signs appear on abandoned houses around the city. Now we have to work to get these new signs adopted in all NPA cities.