Published: July 02, 2008 01:49 am      

HOUSING COURT: City is seeking lender information

A fresh batch of housing cases involving financially strapped property owners has emerged in Lockport City Court.

Judge Thomas DiMillo is hearing housing cases weekly now, instead of bi-weekly, he said after a lengthy Tuesday session, because the number of new cases is increasing rapidly as the building inspection department cracks down on code violations, particularly at rental properties. Eight new cases were opened Tuesday and six were continued.

Nearly half the new cases involve property that is being taken by a lender or was deserted by an owner for lack of means to maintain it.

In each case, prosecutor Matthew Brooks warned, the city expects absent owners to make sure the houses are secured, the grass is mowed and the properties stay generally tidy until they’re sold and become somebody else’s responsibility.

Also, at their next appearances, defendants claiming their mortgages were foreclosed must bring proof of that, so the city can see lender identities and contact information and start hitting them up for repair commitments. A defendant claiming financial inability to take on repairs must bring proof he or she is really trying to sell the property.

The cases will remain open until properties change hands or the city gets a commitment from somebody to correct violations, Brooks said.

Initially Brooks took the prosecutorial stance that the owners of problem properties remain responsible for code violations even if they’ve been ousted by a foreclosing lender or don’t have the financial means to deal with them.

Now Brooks is asking foreclosed owners’ help to secure justice from lenders, who arguably have some ownership interest in property even if they don’t possess the titles. He’s doing so at the direction of Mayor Michael Tucker, who objected strongly to the outcome of a recent case involving an impoverished owner and a reluctant bank.

David Stewart, formerly of 31 Elmwood Ave., was sentenced to pay a $1,000 fine and perform 60 hours of community service after he pleaded guilty to four code violations at a house he hadn’t lived in for three years. Stewart’s lender started foreclosure proceedings in 2005 but never completed them. Taxes weren’t paid on the property for three years, so the city seized it in April.

During prosecution, Brooks had asked the bank to relinquish its $60,000 claim, so Stewart could have the title for the price of past-due taxes totaling $9,000 — but Stewart, who is disabled, said he couldn’t raise the money.

In the end, Stewart was punished and the violations remain. At the same time, Tucker said, the lender got away with “dumping” a problem property on the city.

“The banks have to share some responsibility too,” he said. “People get evicted by these banks and they don’t even know they still own the house because the bank doesn’t tell them that — and it doesn’t (take title) either because it doesn’t want to be liable. That’s underhanded. We have to react to that.”

While still arguing whoever is named on the deed owns a house and its problems, Brooks suggests defendants could help themselves by supplying him with lender information. He said he can try pressing the lender to: Admit liability and repair violations itself; forgive a mortgage and let the deed-holder have full possession; or work for a quick-as-possible property sale so that it becomes someone else’s headache.

In Tuesday proceedings:

• David and Andrea Woods were arraigned on seven code violations found at 34 Pound St., the house they moved out of this past October after filing for bankruptcy. They seemed confused about why they’d been summoned to court since, Woods said, “we assumed the bank owned it.”

Foreclosure proceedings were started by M&T Bank this past March, according to paperwork the Woods showed the court. Still, Brooks advised, the process can take nine to 12 months — and until it’s complete, they remain the owners of record. They are to return to court July 29 to report where things stand.

• Alice Mault was arraigned on four code violations found at 23 Vine St., which she said she no longer lives in because she’s elderly and frail. Mault said she can’t afford to hire anyone to fix the roof, chimney, porch and exterior paint problems she was cited for and is trying to sell the house as-is. DiMillo advised Mault to obtain estimates anyway and bring them — plus a progress report on the sale effort — to her next court appearance July 22. “Drop the price to sell (the house) or hire somebody to fix it, it has to be repaired,” he said. “It can’t just stand the way it is.”

• Stephen Walsh, trustee of the 407 South Street Residential Land Trust, was arraigned on two code charges, unsafe structure and unsound structural members.

The property is “very unsafe” and should be demolished or stabilized immediately, building inspector Clayton Dimmick said.

Walsh asserted he personally is not the owner of 407 South St., the trust is. He told court officials the trust took over the property with the intent to renovate it but hasn’t been able to get financial support to do so.

Walsh said the trust acquired 407 South St. in April 2007, taking it off the hands of the former owner who was being foreclosed on, and the lender recently restarted the foreclosure proceeding. He said the trust will not invest in the property under that condition.

DiMillo suggested the law can hold the trust responsible for the violations.

“There are cases out there saying until the hammer falls at the auction, you’re still the owner,” he told Walsh. “Don’t you bear any responsibility? You can’t just accept the benefits of property ownership and not accept the responsibilities, too.”

Walsh is to return to court July 15 with financial documents. If Walsh can show foreclosure hinders the trust from obtaining rehab financing, Brooks said he’ll try pressing the lender for repairs or lien release.