Another foreclosure wave looms
Hundreds of properties are delinquent on loans or are underwater, officials report
Milwaukee officials detail concerns that another wave of foreclosures could damage vulnerable neighborhoods still recovering from the last housing crisis.
Milwaukee officials on Thursday detailed new concerns that another looming wave of foreclosures could damage vulnerable neighborhoods still recovering from the last housing crisis.
Major mortgage-servicing companies have given data to the city and community groups such as Common Ground that suggest there are hundreds of properties that are delinquent on loans or are underwater, meaning property owners or the holder of the mortgage owe more than the home is worth.
Aaron Szopinski, the city’s housing director, sounded the alarm that Mayor Tom Barrett and the city did not want a repeat of the years following the recession.
“What we do know right now is not very good,” Szopinski told members of the Common Council’s foreclosure and abandoned homes committee. “We do not want a sequel.”
According to city officials, there are three large mortgage-servicing companies that are responsible for many troubled properties in the city. One of those, Nationstar Mortgage, is largely controlled and owned by Fortress Investment Group, a hedge fund co-founded by Milwaukee Bucks co-owner Wes Edens.
Edens’ involvement with Nationstar — he sits on its board of directors — has brought a political dimension to the housing issue because of the Bucks’ efforts to build a new downtown arena.
Edens and co-owners Marc Lasry and Jamie Dinan, as well as a sizable number of local investors, have said construction of the arena will require private and public dollars. Team owners have said they need contributions from the city, county and state to build the arena. So far, Gov. Scott Walker has proposed a $220 million state bonding plan as part of the financing; city and county officials have not yet detailed in what form they would be willing to contribute toward a final financing package.
At least in terms of Nationstar, that gives the city leverage in negotiations, said Ald. Bob Bauman.
Nationstar has provided information on its operations in Milwaukee. According to data provided to the Milwaukee Journal Sentinel, Nationstar is responsible for a total of 3,184 properties in the city, of which 553 are delinquent. In addition, Nationstar says 656 of the loans are underwater.
Another large firm, Ocwen, says it has 4,871 properties in its Milwaukee portfolio. Of that number, 863 are considered delinquent and 1,481 are considered underwater properties.
It is not known how many properties Green Tree Servicing, another mortgage-services company, handles in Milwaukee.
John Hoffman, a Nationstar spokesman, said Nationstar is servicing 153 accounts that are in foreclosure.
At Thursday’s meeting, a contingent of several dozen Common Ground members listened as Randy Jones, a Common Ground member and west side homeowner, told of his frustration of living next to an abandoned home controlled by Nationstar.
Jones said he had purchased a home through the Milwaukee Rising program, which is the development arm of Common Ground. He said he was concerned that the vacant home next to his could be the target of vandals and criminals.
“We need to hold Nationstar and Ocwen accountable,” Jones said.
Jones outlined three demands Common Ground has made of Nationstar:
That Nationstar give the city 300 foreclosed and realestate-owned properties plus $75,000 per property for rehab work and/or a reduction in the principal on the loan.
That Nationstar give the city $1 million a year for five years to hire housing counselors to go door-to-door to help families whose properties are delinquent or underwater to restructure their mortgage.
Assign a full-time Nationstar employee to work with Milwaukee housing counselors to help people with their mortgages.
Jones asked the Common Council to approve a resolution in support of Common Ground’s demands.
Deputy City Attorney Danielle Bergner told committee members that much of the problem involving troubled properties is the lack of information. She detailed one case of an abandoned home in the 3500 block of N. 49th St., which she said had a complicated and convoluted story involving Bank of America and Nationstar. It took three years to get the home to a sheriff’s sale.
“We don’t know who is controlling the mortgages of these properties,” she said.
Szopinski told committee members that the mayor and Common Council President Michael Murphy had invited the CEOs of the three major mortgage-servicing companies to Milwaukee to discuss the issue.