The pictured house obviously has been abandoned and is not in the city. However, with so many people facing foreclosure and no money vested in the properties by the delinquent homeowners (i.e., no down payments), it's becoming more common for owners to just mail the keys back to the lender. Marcie Geffner called this "jingle-mail" in an article about walk-away homeowners published in Inman News on February 12, 2008. The unlucky lenders who receive jingle mail become the owners of vacant and abandoned homes because the owner has walked away.
Bank owned homes are the lifeblood of rehabbers who purchase the homes at a discount and repair them for future resale at a profit. Rehabbers tend to be the primary buyers of such homes because normal buyers don't have the funds or ability to do major repair projects while they live somewhere else. Lenders also do not give traditional mortgages on properties that need considerable repair.
Many of the bank owned homes have become registered vacant buildings. In fact, part of the existing St. Paul housing ordinance is that vacant buildings must be registered with the City. To be law abiding, lenders should register their St. Paul foreclosed properties that are considered abandoned. That registration places the property on the registered vacant building list which is published monthly and currently has 1625 identified properties.
An amendment to the current St. Paul building code has been proposed by Dan Bostrom from Ward 6 that will directly impact the change in ownership of registered vacant buildings. The amendment would prohibit the sale, purchase or change in title or ownership of any residential property that has been designated as a vacant and/or abandoned building in St. Paul without first getting a certificate of occupancy or certificate of compliance from the City. If this amendment passes it could drastically impact the future sales of any of St. Paul's abandoned homes whether they are owned by lenders or private parties.
Once on the registered vacant building list, the new proposal would require the banks to fix the property before it could be sold. Fixing houses is NOT the business that banks are in! They have already lost money on the foreclosed property and are certainly not going to invest more money into a lost cause. My thought is that this will cause more vacant properties to languish unoccupied causing them to grow more and more dilapidated and become more of a blight on St. Paul neighborhoods.
I just don't get the reasoning behind this proposal. It totally confuses me that an amendment like this would be proposed at a time when the market is being flooded with vacant buildings which has caused all kinds of havoc already. To put a hurdle of this kind before the sale of a foreclosed property is totally beyond my comprehension. To better understand the proposal (make sure it's what has been summarized to me) and to voice my opinion for the St. Paul City Council, I will be attending the public hearing on this coming Wednesday, February 20, at 5:30 PM in the City Council Chambers on the third floor of City Hall, 15 West Kellogg Boulevard in our great city of St. Paul.