Maintenance issues linger for abandoned homes

WASHINGTON — Making sure broken windows are fixed, lawns are mowed and piles of trash are removed at vacant homes remains a lingering challenge of the housing crash five-and-a-half years after the end of the Great Recession.

Foreclosures recorded by Fannie Mae peaked in late 2010, but an inventory persists of long-vacant homes with broken or boarded-up windows, peeling paint, overgrown bushes and weeds, and stacks of refuse.

Many of the homes become eyesores that drag down neighborhood property values, lowering tax revenue for municipal governments.

"Ultimately, it is pulling down the tax base for an entire city,'' said Shanna Smith, president and CEO of the National Fair Housing Alliance.

It's one reason the housing recovery is lagging other areas of the economy.

Vacant homes with mortgages awaiting a bank takeover are frequently referred to "zombie" homes. Other vacant homes are bank-owned, and still others don't have a mortgage at all.

Pockets of abandoned homes have blighted many neighborhoods in urban areas. In New York, the problem is especially acute in upstate cities that are losing population, and parts of New York City.

"The epidemic of lenders refusing to maintain vacant and abandoned houses... is placing a huge burden on local governments and on first responders, and causing local resources to be drained by fires, break-ins and other hazards caused by zombie properties,'' New York Attorney General Eric Schneiderman said in a statement.

Failure to maintain abandoned homes suitable for resale is a bigger problem in minority neighborhoods than in predominantly white ones, the National Fair Housing Alliance found in a survey of 30 metro areas released in September.

Bank-owned abandoned homes in minority neighborhoods of Memphis, Tenn., were 8.8 times more likely to have piles of trash or debris than those in white neighborhoods, the alliance found. In Kansas City, Mo., bank-owned homes in minority neighborhoods were 3.6 times more likely to have damaged or broken windows than those in white neighborhoods.

The alliance also has criticized national contractors hired by banks to manage foreclosed properties. It has filed at least three complaints targeting such contractors, including one filed in May with the U.S. Department of Housing and Urban Development against Safeguard Properties, the largest national vendor providing home preservation and maintenance services.

Major banks, as well as by Fannie Mae and Freddie Mac, hired national vendors to maintain abandoned homes during the height of the foreclosure crisis.

Freddie Mac, however, has agreed to switch from national vendors to local home preservation firms. It also created a $2,500 fund to cover costs on each home.

Fannie Mae also is moving more toward using local home preservation contractors as the number of its foreclosed homes decreases, said spokesman Andrew Wilson.

Congress also has taken notice. Twenty-six House Democrats earlier this month asked the inspector general of the Federal Housing Finance Agency to investigate whether maintenance contractors used by Fannie Mae and Freddie Mac are doing an adequate job in black and Latino neighborhoods.