AUSTIN, Tex. — With rising crime and vandalism prompting one lender to bulldoze homes rather than incur increasing costs to carry the foreclosed properties, are some Florida houses owned by CUs and the NCUA next to be demolished?
While one source indicated to Credit Union Journal that demolition of at least some of the homes NCUA came to own as the result of the failure of Norlarco Credit Union is something the agency is considering, NCUA said it has made no decision related to the properties. The federal government currently owns more than 50,000 properties nationally, many of which, including NCUA-owned properties, have the additional problem of having been built with drywall manufactured in China. Some critics, and several lawsuits, allege that the drywall is causing air conditioning units and copper pipes in those homes to corrode, which is increasing costs to repair foreclosed homes and impairing financials' ability to rent or sell the properties.
A similar situation may be driving the rising crime rate in Florida's Lehigh Acres, according to the Lee County Sheriff's office. Sergeant Larry King told Credit Union Journal that officers patrol Lehigh Acres, but due to the fact that many of the homes are vacant and not kept up, the community has become "the predominant area in which we have had the most issues with vandalism."
3 BRs, 2 BA, No Appliances
As Credit Union Journal reported Feb. 23, much of Lehigh Acres and neighboring Cape Coral is made up of tract home ghost towns, full of empty lots, foreclosed homes and homes that have never been occupied. King said that a big issue is theft of appliances.
"We have some government takeover of these homes and they are putting back appliances right after the appliances are stolen, which does not make a lot of sense. They put appliances back and they are victimized again."
Jack Lee and Jacqueline Chang, who run the Fresh Start lease-to-own program in Florida that's connecting lenders and renters to eventually sell foreclosed homes (CU Journal, March 30, 2009), understand the problem. Lee, manager with the Ft. Meyers, Fla.-based Chang Group, recalled when a local lender replaced appliances in a home that had been vandalized. "They put new appliances in the day before closing and when they arrived the next day to close, the appliances were gone again."
Chang, president of the Chang Group, said thieves commonly steal copper coils from outdoor air conditioning units and strip homes of wiring and copper pipes. "About 60% of the homes that we end up managing have been vandalized," Chang said. "We've seen some vandals take every door out of the house. I remember one home where every wall was hit with a sledgehammer. You see everything from destruction of homes, gang graffiti, to crack houses. It's incredible."
Chang said Florida lenders also face high electric bills to keep air conditioning running. "If you don't have AC or put in a dehumidifier, you'll own a mold factory."
Meanwhile, due to concerns over Chinese drywall, Chang said Fresh Start is now only looking to include "older" homes into its lease-to-own partnership with financials to eliminate any chance a rental might have the drywall issue. She noted that the NCUA has pulled all of its inventory of rentals (CU Journal, March 30) off the market due to "undisclosed" reasons. "The homes are still for sale, just off the rental market," she said.
NCUA Director of Public and Congressional Affairs John McKechnie said the agency is not currently leasing its homes in Florida due to "market conditions," but expects to resume in the future. McKechnie said the agency has not made any decisions about the disposition of its Florida assets and is not speculating about leveling homes to just maintain the land.
Escaping a 'Serious Issue'
Jim Simon, VP of loss mitigation at $6-billion Suncoast Schools FCU in Tampa, said it has not considered demolishing any of the homes it owns in the area. But the credit union is very aware of the problem with Chinese drywall that is prompting some lenders to board up homes that have the problem and wait for the market value of the properties to rise to make replacing the drywall worthwhile. "Fortunately, Suncoast has currently escaped any problems with Chinese drywall. But it is a serious issue."
