Sep 7, 2011
As I negotiate $1 million in fines levied against three assets that were part of a larger bulk purchase a few months back, today’s story in National Mortgage News comes as no great suprise:
As if there were not enough considerations for investors sizing up the many distressed mortgage asset-backed securities still out there, it looks now like they should also take into account growing momentum in municipal efforts to get securities trusts and servicers to pay for distressed property upkeep or face fines.
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Perhaps the only upside for investors related to this development is that it is somewhat quantifiable, although as Moody’s Investors Service noted in a recent report it does also add to some unquantifiable costs such as possible lawsuits.As noted on this publication’s website last week, servicers would pay a $100 vacant property registration fee in Springfield ($250 in Chicago) once it is determined that the property is uninhabited.
Both ordinances require servicers to post a $10,000 surety bond with the city to cover vacant property maintenance at a cost of generally $1,000-$1,500 per property, and then even if the city does not need to collect on the surety bond it returns only about half the bond amount.
