Thanks to a new law designed to address blighted and abandoned properties and a growing number of house flippers, it may not take long or much to lose your home in Prince George’s County. Foreclosures, in the county, are on the rise again and a legal loophole has allowed some homeowners to be pushed out of their homes in as little as six months through the new foreclosure process.
The fast-track provisions for home foreclosures in the county are included in Maryland HB 702/SB 1033, which passed the Maryland General Assembly unanimously, and is on its way to Gov. Hogan’s desk for his signature. During the process, Community Blight Solutions of Cleveland, which helped to push through a similar law in Ohio, say they worked with consumer advocates, local governments, banks, and mortgage brokers to adopt amendments that improved the bill while maintaining its intent to expedite the foreclosure process.
The original intent of the law was to help communities eliminate blight caused by vacant properties, but instead it may become a launching pad for private investors (house flippers) and mortgage companies to push people out of their homes quicker. This new law will significantly expedite the foreclosure process for vacant properties in an effort to get them back on the tax rolls as soon as possible.
“Blight caused by vacant properties is a serious problem in certain Maryland communities,” said House bill sponsor Maryland State Del. Marvin Holmes (D-District 23b). “The longer properties remain vacant – the greater the chance problems will occur, including vandalism, crime, and lower property values.”
While that may be true in several communities because banks rarely re-deed a property after foreclosing on it to save money, a growing number of savvy real estate investors are using the law to move people out of their homes quickly and in some cases illegally.
HB 702/SB 1033 is supposed to offer significant protections for homeowners including: requiring secured parties to serve a petition for expedited foreclosure on the mortgagor and post a notice on the property and allowing the owner of the property to challenge any finding that the property is vacant and abandoned. The bill authorizes a secured party to expedite the foreclosure process provided the party can demonstrate to a court that the property is vacant and abandoned by satisfying at least three of eleven specific criteria listed in HB 702/SB 1033 (e.g., utilities disconnected, windows and entrances boarded up).
To date those protections have been few and far between in Prince George’s County where there are a growing number of foreclosed homeowners who claim their homes were taken without due process and without the proper standing or original signatures from court officials. For instance the County Clerk allows a stamped signature to move a foreclosure forward.
“We have found that all of this is a massive conspiracy,” Patricia Washington, who leads the Justice for Homeowners Movement in the County, told the AFRO. She held several rallies at the Courthouse protesting foreclosures. “I had one Judge to tell me to stop. It’s criminal what this county is allowing to happen to homeowners who get behind on their mortgages.”
In an effort to reduce foreclosure backlogs –- which is not the same as reducing foreclosures -– private real estate investors with capital and connections can snap up a bunch of houses –- sometimes before a foreclosure sale -– and then turn around and sell the houses at a significant profit.
Integrity Professional Contracting, located in the county, purchased a four bedroom, four bathroom house located at 7800 Suiter Way, in Landover, for $73,000. The Washington Post’s real estate report listed Mark H. and Gerard W. Wittstadt as the sellers. However, Maryland public records show that the actual homeowner was Olusegun A. Bright. Bright bought the house in 2005 for $215,000. Forced into foreclosure after the collapse of the real estate market, he sold at enormous loss.
The Wittstadts were what is known as substitute trustees. In Maryland, these companies help push along the process of foreclosure. When a homeowner falls behind on mortgage payments, the bank holding the mortgage note can contract with a foreclosure firm — which acts as substitute trustees, standing in for the lender -– rather than dealing directly with the homeowner. Sometimes this arrangement works out well for the bank, which has fewer upset borrowers to deal with and fewer individual cases to decide justly on the merits. Integrity Professional Contracting sold the 7800 Suiter Way property on October 10, 2013, for $193,000.
“You have to know somebody to get those deals,” a mortgage broker, who didn’t want to be identified, told the AFRO. “You just can’t walk up to the county steps and think you are going to buy a foreclosed property. By the time the sale happens the deal is done. A lot of times, and I can’t prove this, they don’t make it out of the County Clerk’s Office. The cream is taken off the top.”