Government should do something about unkempt properties

Thursday, Oct. 30, 2008 | midnight

One of the first orders of business for the 2009 Nevada Legislature should be enactment of measures to protect the quality of life in our neighborhoods that are deteriorating due to the problem of foreclosed, abandoned homes.

In neighborhoods without homeowners associations, neighbors fed up with uncut bushes and grass, dusty sidewalks, broken windows and green, foul-smelling pools have little recourse except to call local governments and hope code enforcement agencies will clean things up. This is a lengthy, cumbersome process and something cash-strapped local governments are struggling to keep up with.

Local governments can also react to problems in HOA communities, but frequently the associations themselves are taking matters into their own hands because they refuse to allow their neighborhoods to deteriorate while they wait for a city or county crew to show up and start fixing things.

The problem in both HOA and non-HOA communities is that when the homeowner stops paying the mortgage and abandons the property, the mortgage lender typically can't or won't maintain the home, yard and pool until the foreclosure process is completed.

That can take nine months. During those nine months, neighborhoods deteriorate, local governments rack up cleanup bills they can ill afford to pay and homeowners associations incur expenses they have little hope of recovering and must pass on to their dues-paying homeowners.

Even after the nine-month foreclosure process, mortgage holders are required to pay only six months of past-due HOA assessments and typically don't pay fines imposed during that period for landscaping and health violations.

This is a problem that isn't going away anytime soon.

RealtyTrac, which compiles foreclosure data, said Nevada had the nation's highest foreclosure rate in September thanks to an 11 percent increase in foreclosure activity from the previous month. Foreclosure filings were reported on 13,022 Nevada properties during the month, an increase of 137 percent from September 2007 and one in every 82 housing units — more than five times the national average.

SalesTraq, which analyzes the local real estate market, estimates 58 percent of homes for sale in the Las Vegas Valley are empty. Most of those vacant homes are in foreclosure.

Neighborhoods are deteriorating, and even homeowners who are current on their mortgage payments and take care of their properties are seeing their property values decline because of the eyesores next door and across the street.

The preservation of our neighborhoods is more important than preserving the profits of banks and other mortgage lenders, especially since many of these banks are now the recipients of billions of dollars in federal money to bail them out from their own mistakes.

Legal impediments must be removed so lenders can take care of abandoned properties in foreclosure and also pay the HOA dues on their real estate.

Local governments and HOAs should aggressively secure and maintain vacant, abandoned homes when banks refuse to or cannot do so. Every penny spent taking care of these properties, along with unpaid HOA assessments, should result in a lien against the property, which would be paid off when the property is sold.

This may mean the lender may take a deeper loss than hoped for on the foreclosure sale. It certainly provides an incentive for the lender to, first, take care of its property and, second, to quickly foreclose on it and sell it.

Most importantly, with this approach, neighborhoods will be preserved even if they have lots of vacant, abandoned homes.