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Five Star’s Delgado and HUD Secretary Castro Talk Community Preservation

Castro and EdFive Star Institute President and CEO Ed Delgado recently met with HUD Secretary Julián Castro to ask the Secretary to consider issuing a mortgagee letter to set the definition and criteria for identifying vacant and abandoned properties and then accelerating those properties to foreclosure.

The problem of so-called “zombie properties,” or those that have been vacated but have not completed the foreclosure process, has become an “issue of national concern,” according to Delgado. About 37 percent of foreclosures nationwide are vacant and abandoned properties, according to Five Star.

When these properties stay vacant for an extended period of time—as long as two or three years or more in some cases—they can potentially have devastating effect on their surrounding communities because they not only lead to lower property values, but they often become magnets for vandalism, squatting, and violent crime. in their recent meeting, Delgado asked Castro to consider opening up a dialogue with the servicing industry to talk about vacant and abandoned properties.

“I have a decent perspective on what you’re talking about, because I used to be a city councilman and then the mayor (of San Antonio),” Castro told Delgado. “So we saw it not just from an individual perspective, but from the perspective that concerns neighborhood associations and community associations and folks that have to deal with the impact of vacant houses on their block, and what it does to everyone and not just the individual.”

Castro said of the proposal, “Send it our way, and we’ll make sure it gets to my desk. I’d love to take a look at it.”

Trying to foster a dialogue on vacant and abandoned properties has been a project of Delgado's and many leaders in the mortgage servicing industry for four years. In November 2015, Delgado delivered opening remarks and moderated two panels—one on transforming blighted communities—at the National Property Preservation Conference (NPPC) in Washington, D.C. In his opening remarks at the NPPC, Delgado called for national solutions for what the vacant and abandoned properties issue and praised Ohio State Bill H.B. 134, a “fast-track foreclosure bill” aimed at expediting the foreclosure process, which had passed in the Ohio State House of Representatives by a unanimous vote earlier in November. Delgado called Ohio State Bill H.B. 134 “an important template towards the introduction of a national course of solution for vacant and abandoned properties.”

The Ohio fast-track foreclosure bill has become a template for several other states to use when drafting similar legislation. The bill, which in its second incarnation after a similar bill failed to pass in 2014, is currently awaiting a vote in the Ohio Senate.

“We are very hopeful,” said Ohio State Rep. Cheryl Grossman, the bill’s co-sponsor. “The discussions are ongoing and we hope to see some action soon.”

Editor’s note: The Five Star Institute is the parent company of MReport and TheMReport.com.

About Author: Seth Welborn

Seth Welborn is a Harding University graduate with a degree in English and a minor in writing. He is a contributing writer for MReport. An East Texas Native, he has studied abroad in Athens, Greece and works part-time as a photographer.

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