1240 Davis St.

Tom Perkins | For AnnArbor.com

Banks neglecting homes they own through foreclosure is is an increasingly challenging issue Ypsilanti Township and other communities across the country face, officials say.

On Tuesday, animal cruelty investigators from the Humane Society of Huron Valley checked live traps for the last of more than 30 cats they hoped to capture that were living at 1240 Davis St. in Ypsilanti Township.

The home had been foreclosed on in April and was now owned by Nationstar Mortgage. NationStar enlisted the services of Equator, a brokerage firm that finds local real estate companies to market foreclosed homes for national banks and companies.

The local real estate company, The Drake Team, discovered the cats, dogs and other animals living in the home and contacted the HSHV, which in turn contacted the township's office of community standards to inspect the home for code violations.

Township officials discovered cats living in the walls and ceilings, and there were several inches of animal feces covering the floor. Officials say Nationstar is responsible for the home, but, like numerous other bank or mortgage company-owned properties in the township, it went neglected.

The house likely will have to be demolished, and officials from Nationstar will not respond to the township’s requests to clean up or demolish the home, officials say.

“Here we are and the taxpayers are going to have to foot the bill to abate the nuisance for good of community,” said Mike Radzik, director of the office of community standards.

In the last several weeks alone, township officials have requested the Board of Trustees approve legal action on four bank-owned homes that are in various states of decay.

“It’s almost every day that there’s another one here, another one there,” Radzik said. “Some aren’t too bad, some are terrible.”

Township Attorney Doug Winters took aim at the banks that accepted taxpayer bailout money but have failed to care for local homes they own.

"It's outrageous that they don’t deal with these properties," he said. "We’re going to need some help from the federal level because the issue keeps growing, and these companies are so incompetent when it comes to tracking their own inventory. There has to be some accountability for these banks, and they need to quit dropping all the responsibility on local municipalities."

Several weeks ago the township began dealing with a home at 1416 Blossom St., which is owned by the Bank of New York Mellon based out of Plano, Texas. The issues there include rotting food left in the kitchen, a mold problem that made it impossible for neighbors to sit outside during the summer and a cockroach infestation that spilled over onto neighboring properties.

The real estate agent and township’s attempt to contact NY Mellon to have them send out a crew to address the issues received no response.

A home at 7331 Essex St. owned by Wells Fargo Bank presented township officials with a typical story. The home had been foreclosed on, its occupants left, but the water remained on. When pipes froze and burst in the winter or the sump pump quit working and the basement filled with water, mold began to grow.

Neighbors complained about the home, which is six years old, and, according to a verified petition filed in Washtenaw County Circuit Court, township building inspectors are finding water levels rising and mold growth accelerating. The home was left unsecured, and wild and dead animals were found inside.

The township is asking a judge to declare the property a public nuisance and order it to be cleaned and cleared of mold. The township also is asking the judge for permission to complete the project if Wells Fargo fails to respond to the order. In such a scenario, Wells Fargo can be billed and a lien placed on the property if the bill goes ignored.

Kevin Heine, a spokesman for Bank of New York Mellon, said his company is only the trustee on a bundle of mortgages called securitizations. Investors buy these bundles, and the Bank of New York Mellon distributes monthly payments to the investors and only acts in an administrative role.

Heine said the bank has no powers or duties related to the actual home. So while the foreclosure action may be brought in the trustee's name, Heine said, the responsibility of managing the home lies with the servicer, which is usually a different large bank, in this case Bank of America.

Bank of America did not return calls for comment.

In some cases, banks walk away from properties and the homes go into tax foreclosure, Radzik said. That extinguishes the lien on the property, and taxpayers are never reimbursed for the bill.

There are other costs associated with the efforts. Officials often don’t know who owns the home and must pay several hundred dollars for a title search, and securing vacant homes also costs several hundred dollars. There are also the legal costs.

One tactic many banks use to avoid responsibility is to claim their homes are still in a redemption period and say they don’t have the legal authority to enter the house. That leaves the township with no options except legal action, though Radzik said some banks will address issues even if the homes are still in a remediation period.

The township is considering several ordinance changes to give itself more tools in dealing with the issue. Radzik said vacant structure owners may soon be required to register with the township and consent to a code inspection. Owners may also be required to keep utilities on to avoid burst pipes and flooding, which officials say cause the most serious public health issues for neighbors.

Although the banks still might not be responsive, the measures will help the township address issues quicker.

"An ordinance requiring annual registration and inspection of vacant buildings would give us a look at them much sooner, hopefully before advanced stages of blight," Radzik said. "Unresponsive banks would be chased the same as they are now. Once into the system, they would be required to maintain the buildings and we would have the ability to monitor them to prevent further deterioration."

And that could mean the difference between "catching" a cockroach problem and not being directly affected.

“Neighbors shouldn’t have to live that way with the odor, cockroaches, mold contamination,” Radzik said.

In a letter to the Bank of New York Mellon, Winters expressed his frustration with the company, which received $3 billion in bailout money and paid its CEO $20 million in 2007.

“I wonder how long it would have taken the Bank of New York to take the appropriate action to remediate this property if someone on the bank’s board of directors were the unfortunate persons having to live next door and deal with this powerful stench, blight, cockroaches, mice and other vermin, etc. etc.?” Winters wrote.

“It is absolutely astounding and ironic that a bank who received 3 billion dollars in taxpayer bail out money, i.e. TARP funds, would act in such an irresponsible manner vis-à-vis this subject property and (according to the realtor) will not even return a phone call to his office.”