(This is a reprint of an article I wrote for my Examiner.com column in Sept. 2009. As of this writing — March 9, 2010, the only change that has taken place is the bank hired someone to build a new fence around backyard of this mess.)
COUNTRYWIDE’s TOXIC ASSET: House destroyed in 2006 fire still valued at $106,890
San Antonio – More than three years after a two-story house with a brick facade was destroyed by fire, it remains on the county tax appraisal rolls with a value of $106,890, and the walls have yet to be demolished even though the ruin is a clear safety hazard to neighborhood children.
The house was built in 2000 and is surrounded by homes in the Sunset subdivision – a west Bexar County-based KB Home development, – that are all less than 10 years old.
The year the house was destroyed, 2006, it was valued at $97,990. Two years later, the official valuation peaked at $110,470. The only reason the price came down a little is because the Bexar Appraisal District made a blanket reassessment of property values in light of the recession.
But the house is worthless. Look at it. There is no roof. The interior was completely gutted. Portions of the back and side walls have caved in. And the two-story high front brick facade is just waiting for a good strong wind to knock it over.
Children, pets sometimes play in destroyed house. Photos by Adolfo Pesquera
This article is not an indictment of the BAD, (more on that organization later; and they really should change their acronym), but a detailed autopsy on what happened to this property, on how it affected this working class neighborhood, and an in-your-face example of toxic assets.
Call it ‘March of the Clueless,’ but going through the history of this property is a discouraging journey into how giant mortgage companies fail to deal with toxic assets – those legions of residential properties we keep hearing about that are worth much less than the institutional owners are willing to admit because that would reveal how weak their portfolios actually are.
For more on that, read: ‘Major banks may report toxic assets as profits’ here.
Back to this autopsy, here is a quick summary for those of you who have to leave after the first nine paragraphs:
Bexar Appraisal District DID NOT KNOW the house was destroyed until I called them on it earlier this week; Bexar County Public Works DID KNOW about it, but they were not notified until last year; Countrywide Home Loan Inc., the owner, most likely does not know the house’s condition, even though the Bexar County Public Works Division code compliance office made REPEATED ATTEMPTS to notify them; Countrywide Home Loan Inc. is still paying taxes on the property, more than $2,000 last year, as if the property is still habitable and in good condition; BUT (here’s the weird part) Countrywide is making NO ATTEMPT to sell the property (no real estate broker signage has been on site for some time); oh, and ProComm, the law firm that acts as trustee for the homeowners association, filed a lien against the last occupant in January 2007, even though she lost the property to foreclosure six months earlier.
How’s that for a comedy of errors?
Now, let’s get back to the neighbors that have to live with this. Maritza Peña, 38, lives in the house immediately to the right of the ruin. She has two children, ages 6 and 11.
She and her husband have complained off and on to whomever they can find in an official capacity.
“We called the homeowners association,” Mrs. Peña said. “They said to call the bank. We called the bank. They said to call the homeowners association.”
By Peña’s recollection, those phone calls took place the first year. Since then, she’s made complaints to the Bexar County Sheriff’s Office. On one occassion, she complained that children were getting into the house.
“The fence fell down. I said, ‘I have kids. Somebody needs to do something.’ The dispatcher told me to fix the fence. My husband was in Afghanistan with the Army. I said, ‘Are you crazy? I can’t do that kind of job!’ I was so mad.”
Peña has no immediate plans to move, but she added that should her family ever need to leave they would have a terrible time selling their house.
“When this house is like that?” she said pointing next door. “Oh, no, no, no.”
Patricia Kelley, 75, lives in the house immediately to the left. She uses a walker and it takes her awhile to answer the door.
“It’s a hazard,” Kelley said of the house. “It attracts small children and animals. My cats go in there a lot.”
Kelley moved into the neighborhood the day of Halloween, 2005. She remembers the evening the house next door caught fire the following July.
“I was home. Somebody was banging on my door. But it was dark and I wasn’t about to go answer,” Kelley said.
The person banging on her door, it turned out, was Mario Peña, Maritza’s husband. He was trying to get Kelley to evacuate. Kelley refused to leave her house until she saw a sheriff’s car pull up. The responding firefighters came from Geronimo Village Volunteer Fire Department.
“There was no wind that night,” Kelley said. “The fire shot straight up.”
Kelley and the Peñas were lucky the winds were quiet. The houses in this subdivision sit only 10 feet apart. Mario Peña and another neighbor were spraying the burning house with garden hoses. Peña was upset the firefighters took about 15 minutes to show up, but the VFD station is on Talley Road – 7.62 miles away.
The firefighters could do nothing to save the burning house. It was in “full bloom,” as firefighters say. But they did keep the neighbors’ properties wet and safe.
The timing of the fire was curious. Kimberly Butler, the previous occupant, moved out the week before, Kelley recalled.
“She had been living there since before I moved in,” Kelley said. “I wasn’t even sure that she was not coming back. There was an above-ground pool in the backyard that was in the process of being installed.”
What Kelley did not know was that Ms. Butler had not kept up on her payments. Countrywide repossessed the house on Independence Day, July 4th, 2006.
I say Countrywide repossessed, but in all things involving giant mortgage companies, nothing is that personal.
Alicia Hughes did the actual paperwork. According to county land records, where Hughes filed her affidavit, she was an employee of National Default Exchange L.P., then a subsidiary of Barett Burke Wilson Castle Daffin and Frappier L.L.P., the law firm of Countrywide Home Loans Inc.
Countrywide, as the grantee (buyer), repossessed the property for $102,040, which I feel safe in assuming was the balance owed on Butler’s mortgage.
The months passed and at first neighbors just assumed something would be done. It might take awhile, but surely something would be done. Then the Peñas decided to make some calls, but they never quite figured out how to get Countrywide’s attention.
Sunset Vista Association Inc., through its HOA manager ProComm, was the first legal entity to take action. But their efforts were a bit misguided. ProComm agent Melinda K. Flowers, in an effort to enforce unpaid home owners association dues, fines and late charges, filed a lien with the Bexar County Clerk for $544.63 against Kimberly Butler, claiming she was still the owner of the property.
That lien was filed Jan. 19, 2007. Butler was out of the house the end of June, 2006.
Bexar Appraisal District, meanwhile, was obliviously raising the value of the house. The valuation went from $97,990 in 2006 to $104,430 in 2007 to $110,470 in 2008, and is presently set at $106,890.
I asked Kelley if she thought the ruin next door was worth $106,890. That old lady looks cute when she rolls her eyes.
Virginia Guzman, an employee in the residential section of the BAD, (there’s that acronym again), had a moment of spoken reflection when I explained that the house at 10143 Bastrop Creek was a flamed out ruin and had been so for more than three years.
“I see that the valuation is $106,890,” she said.
“I know that,” I said. “That’s why I’m calling.”
“I am going to create an inspection request for someone to go out and visually inspect that property,” Guzman said.
Okay. Now we’re making progress.
Guzman explained that even after an inspector eyeballs the property, a reduced valuation will not become official until the next round of valuations are released in 2010.
Better late then never, I say. But why did the valuation keep going up in the first place?
Guzman explained that most properties are reassessed each year using data from recent home sales in the immediate area. There just are not enough inspectors to visually inspect each house in Bexar County.
And if the owner does not protest, the valuation is never given a second look.
Needless to say, Countrywide never protested.
“I don’t think they know that it’s in that bad of a condition,” Guzman said. “Otherwise, why would they keep paying taxes at the value we give it?”
And Countrywide is paying the taxes.
Nancy Moreno at the Bexar County Tax Assessor-Collector office said Countrywide is current on its taxes for this property. Their last payment was made Dec. 30, 2008.
The next bill is due this December, and it is for $2,295, AND fourteen pennies.
The BAD may have been ignorant of the situation, but the Bexar County Public Works Division was not.
“The first official complaint was made to our office in 2008,” said Carol Kendall, the nice lady that answers the phone in the Code Compliance office of Public Works.
Code Compliance sent a certified letter to Countrywide on May 23, 2008 notifying the mortgage company/absentee owner of the property’s condition.
“On June 10th, the letter was returned unsigned,” Kendall said.
On June 17, 2008, a Code Compliance officer posted a second notice on the front door of the property, and in September of that year Code Compliance, following procedure, posted a notice in the city’s newspaper of record.
I’m guessing Countrywide doesn’t read the newspaper, either.
The case is now filed with the Justice of the Peace, Precinct 2, Kendall said.
What does all of this accomplish?
“Most of the time, we don’t do a total demolition,” Kendall said.
The extent to which Public Works takes action to render a property safe will depend on the opinion of the county’s environmental engineer, she said. However, the case is still pending; there is no court date set for a hearing.
Kendall is not optimistic anything will happen through the court soon. As she explains it, due process requires a lengthy amount of time to get a response from Countrywide’s “agent for service.”
That would be CT Corporation System, Kendall said. Their headquarters is at 3 Winners Circle in Albany, N.Y., but Bexar County would be dealing with the Dallas office.
CT Corporation System describes themselves as a Wolters Kluwer business, providing “intelligent software and service solutions that empower legal professionals to more effectively manage dynamic information, speed workflows and make critical decisions.”
I’m sorry. I have to laugh now. I think I’m going to hurt myself.
Kendall has some experience with CT Corporation System.
“This particular company, they’re hard to work with,” Kendall said. “They represent a lot of big mortgage companies. I don’t think it will do you any good to talk to them.”
Ms. Kendall, I will take your word on that.
Alright, in the whole scheme of our nation’s toxic asset mess, this is just one tiny spec, one real world example.
Still, I feel I have learned a lot about how big banks and mortgage lenders operate versus how local public entities operate.
Bexar Appraisal District is going to do something.
Bexar County Public Works Division is trying to do something.
And Countrywide is …. what?
They are paying taxes on a pile of charcoal.
It irks me that I’m helping Countrywide (now a Bank of America holding) by doing them the favor of getting the valuation lowered on a house they “don’t know” exists!
I think they owe me $2,295.
They can keep the fourteen cents.
PS: In the interest of full disclosure, I have a real property interest in that neighborhood. But that’s not why I’m exposing this mess. (I really do want the two grand. Is there a lawyer out there that thinks I have a case?)