It is difficult to pinpoint the month, or even year, that the mortgage crisis officially began. In 2005, the real estate industry felt its first hints of a housing-sales slowdown. By 2006, foreclosures were on the rise nationally. In 2007, reports of a subprime meltdown were making news. Late in 2008, Congress passed a controversial bailout package, and hopes rose that the housing crisis would begin to subside.
We all know that didn't happen. In fact, the crisis deepened. In 2009, credit tightened, companies cut spending and unemployment soared to more than 10 percent, where it hovers today. Without jobs, homeowners with historically strong credit scores and prime loans increasingly fell behind on their mortgages and suffered or faced the threat of foreclosure.
Many programs and ideas have emerged to blunt the impact of the housing crisis. Those have included: foreclosure moratoriums and loan-modification programs; vacant property legislation either enacted or under consideration by hundreds of cities and a handful of states; loss-mitigation efforts by mortgage servicers; and a wide range of foreclosure-prevention efforts by numerous governmental agencies and nonprofit organizations around the country.
It is too soon to say which programs will ultimately prove to be successful. However, as a field service company, whose job is to protect and preserve vacant properties on behalf of the mort- gage servicing industry, we often are among the first to witness the potential and experience the impact of each of the various programs.
Here is our "boots on the ground" perspective.
Vacant property legislation
Two years ago, cities struggling with the burden of vacant and abandoned properties began to enact vacant property legislation. The goal was to levy fines on property owners and mortgage companies to compel them to maintain properties and prevent code violations.
It appears vacant property legislation may be less successful than many cities had hoped. The reason is that the vast majority of vacant properties are being maintained by mortgage servicers. In fact, according to the Mortgage Bankers Association (MBA), last year the industry spent about $4 billion maintaining vacant properties.
Often, the most troublesome properties--the ones that hit the radar screen of code-enforcement officials--are under the control of irresponsible private owners or investors who simply ignore the ordinances, just as they ignore their responsibility to care for...