DURHAM — Vagrants built a bed on the back porch of 212 E. Geer St., piling dirty pillows around empty boxes of cheap cigarillos.
Drug dealers placed a sofa on the crumbling front porch of the abandoned house, hiding their stock in a broken brick pillar. Next-door neighbor Frank Burgess would regularly pluck used needles off the front lawn, trying to keep his street clean.
On Friday, 30 protesters gathered at the boarded-up house just off Roxboro Street, hoping to draw attention to its status as a “bank walk-away,” a blighted property trapped in a wire of legal tangles.
Its out-of-town owner declared bankruptcy, leaving it empty since 2008. Bank of America has stalled a foreclosure sale, taking no action for nearly a year. A Colorado firm owned by a Japanese bank is responsible for maintaining the property, and has not.
“Everybody says it’s not their problem,” said Peter Skillern, executive director of the Durham nonprofit Reinvestment Partners. “The neighborhood has been left with the fact that it’s their problem.”
The problem, protesters say, comes when banks opt not to finish foreclosing on delinquent loans, figuring that the cost of going through the proceedings will outweigh what they’re likely to collect. Foreclosed houses near 212 E. Geer St. have brought around $15,000 at sale.
The U.S. General Accounting Office estimates between 14,500 and 34,600 abandoned foreclosures between January 2008 and March 2010, most of them in economically distressed areas. While a small number nationwide, the GAO says these walk-aways leave a big hole in their neighborhoods.
In Durham, Housing Code Administrator Rick Hester said bank walk-aways like the Geer Street house present a common problem, and responsibility for these properties is hard to identify. Arthur Barnes of Rocky Mount still comes up as the owner on tax records, even though the city knows he has declared bankruptcy and been freed of any liability.
Next door, Burgess and his wife have gotten their neighbor’s violation notices delivered to their house, even though the paperwork is addressed to Bank of America. When they contact the bank, he said, they are told the house isn’t the bank’s property.
Still, he takes it on himself to pick up after drug dealers and prostitutes who squat there.
“I love this place,” said Burgess, a city bus driver. “It’s really important that where you stay is a representation of you.”
Following the paper trail
The trail of paperwork is hard to follow.
Barnes bought the Geer Street house in 2006 for about $66,000, improved it and refinanced in 2007 for $91,800. Renters damaged the property; Burgess called them “nasty.”
Subprime lender Countrywide made the original loan, which was then acquired by Bank of America, then sold to Bank of New York Mellon. Bank of America stayed on as loan servicer, but it hired Specialized Loan Servicing as a sub-servicer. SLS is owned by Bank of Shinsei in Japan, so protesters posted signs Friday – “Stop Community Blight” – in both English and Japanese.
A Bank of America spokeswoman sent a statement by email Friday:
“We appreciate Reinvestment Partner’s concern for the property. SLS has been servicing the loan since December 2011. It is our understanding that the SLS has been granted relief from the bankruptcy stay, and they are now engaged in the foreclosure proceeding.”
Reinvestment Partners says it tried for more than a year to resolve the problem and get the house occupied without success, so in August, it filed a motion with the Durham County Clerk of Court seeking to complete the foreclosure. With the motion granted, the property must be sold by early December.
Reinvestment Partners hopes to acquire and rehabilitate the Geer Street house. Just down the street, Skillern said, stands a once-derelict property the nonprofit bought to turn into office space.
Attending the protest with his wife and 4-week-old son, neighbor Peter Katz said he has counted 23 assaults and 14 burglaries within 500 feet of the Geer Street property in the last four years. He hopes to see an end to tangled-up deals that fuel them.
“We didn’t make these loans,” he said, “and it doesn’t seem right that we’re having to pay for them.”