BRADENTON -- When it comes to classic Hollywood villains, it's either a guilty butler or somehow a banker involved in making trouble.
It's hard to point the finger at a butler for Bradenton's many abandoned properties. How much blame can be placed on banks? Depends on the bank, according to Code Compliance Manager Volker Reiss, who said the city faces a three-pronged battle when it comes to maintaining abandoned properties.
The best scenario is when a bank completes a foreclosure and takes ownership of the property. Reiss said most banks will view it as an asset and "minimally maintain it. It's theirs now, so they need to protect their asset, and if not, code enforcement can go after the bank to bring the property into compliance."
But not even the best scenario is simple. Reiss said there are times when a bank will complete the foreclosure process but fail to register the title with the Manatee County Property Appraiser's Office.
"So we look at the county records and see that it still has the original owner's name on it," he said. "We've noticed it does happen and don't know why, but I'd imagine the reason is beneficial to the bank to delay the process."
According to the Manatee County Clerk's Office, the county only handles the sale of the foreclosed property and issues the deed, but it's up to the bank to register the property, and the county does not have a time frame, leaving action against the property vulnerable to more delays.
Even if the city does levy fines, "There comes a point when the fine becomes more than what the home is worth, and now we have a real problem," said Reiss.
The problem gets resolved by providing relief to the new owner because code violations are passed onto a new buyer and not retained by the primary violator. Reiss said there is no reason to punish a new buyer when the goal is for someone to clean up the property.
According to city attorney Bill Lisch, state law requires the owner to inform a new owner of code violations "but does not provide a penalty for not doing so."
Lisch said the same law protects the bank from prior code violations by requiring them to be wiped clean at the time it takes ownership after foreclosure. Banks are awarded a clean slate and can begin to acquire violations and be allowed to pass those on to the individual buyer of the property.
Reiss said that's why the city is quick to forgive those liens to a new owner, because "they had nothing to do with it."
The blue monster
An example of banks benefiting from the law is a two-story home on 12th Street West in the Village of the Arts next door to the Arts and Eats Restaurant.
The home has been abandoned for years and is structurally unsound. Code enforcement has ongoing action against the former owner. In May, the house that village residents call the "blue monster" went up for sale om an online auction. One of the three banks to purchase the property is the Bank of New York, even though it was an original co-owner of the mortgage, essentially selling it back to itself.
Because of the law, "We now have to start the code enforcement process from scratch," said Reiss. "For us, it's like playing whack-a-mole. A lot of people think the city can make the banks do something, but it's a legal process that takes time. If someone is savvy enough, they can use that to their advantage."
Donna Slawsky, owner of Arts and Eats, said banks have the advantage.
"Banks do everything they can to avoid responsibility," said Slawsky. "It's a crazy system that is destroying neighborhoods."
Reiss said change can only occur from the top.
"But that will never happen," he said. "All we can do is stay busy dealing with the symptoms of the disease rather than the root cause. Change has to come from the Legislature and policy-makers."
Lisch said changing state and federal banking regulations would be a monumental task. When asked if there was hope for change, he said, "I don't think so."
Just the beginning
With bank-owned properties and their associated problems being called the "easiest scenario," Reiss said there are worse challenges facing the city with properties still tied up in the foreclosure process and what he calls "bank walkaways," where a bank forecloses and decides it doesn't want the property. The property reverts back to the owner when the bank dismisses the foreclosure, but by then the owner is long gone.
The property is truly abandoned at that point, "and that happens a lot," said Reiss. "It just sits there, and the city's only recourse is to use limited resources to try to mow it, clean up the trash people start dumping there and chase out the vagrants.
"A lot of people are living next door to these places and probably think they live in hell and don't see anyone doing anything about it," he added. "They are probably asking why the city isn't doing anything about it. I wish we could, but that's not the case."
Not all banks are the bad guys. Reiss said locally operated banks such as Bank of the Ozarks and others are responsible with the properties they own. While Reiss declined to name the problem banks, records show the majority of issues arise with out-of-state or foreign-based banks such as the German-based Deutsche Bank, which only has six branches in Florida, including three in Miami, two in Jacksonville and one in Palm Beach County.
Banks that do not operate within the communities that are affected by blighted properties are less likely to respond quickly to code enforcement issues, according to Reiss, who said local banks have a better understanding of how their investments are affecting their neighbors and customers.
"With our roots as a community bank, we approach this issue as a neighbor," said Bank of the Ozarks Market Leader Kerry Ward. "We wouldn't want to live next door to a dilapidated home that is an eyesore or safety concern. When we gain control of a home through foreclosure, we take care of any safety concerns, we mow grass and correct code violations immediately. This is not only being a community partner, but is good business."
Mark Young, Herald urban affairs reporter, can be reached at 941-745-7041 or follow him on Twitter@urbmanmark2014.