Foreclosure wave: San Jose tries to protect neighborhoods

Overgrown lawns and vegetation can pose fire hazards, open doors and windows can attract vandalism, and excess debris creates eyesores, said Michael Hannon, deputy director for code enforcement.

"A year ago, I had one inspector manning the vacant building program," Hannon said. Now he's spread the responsibility among 20 inspectors.

A report prepared recently for the San Jose City Council by the city's housing and planning departments provides a detailed snapshot of the city's foreclosures from May through July, and offers a look at how various city-supported programs are addressing the problem.

The report shows the San Jose neighborhoods hardest hit by foreclosures during the three-month period are concentrated east of Highway 87. The highest concentration of foreclosure filings was in ZIP code 95122, where 2.6 percent of all households were in some stage of foreclosure. Three other ZIP codes — 95111, 95116 and 95127 — had foreclosure rates of 2 percent or higher.

"When you look at the number of families impacted, it's a large number, and we need to be responsive as much as we can," said Leslye Krutko, director of the city's Department of Housing, referring to those families who are losing their homes.

The 10 worst-faring ZIP codes in San Jose all performed worse that the national average for the second quarter, which was 0.6 percent, according to data from RealtyTrac, which also provided the data for the city report. But "no San Jose ZIP code is suffering as badly as Stockton," where the foreclosure rate in the second quarter was 4.0 percent, the report noted.

Properties are considered to be in foreclosure if owners received either a notice of default or a notice that the property was scheduled to be sold at auction, or if the property was repossessed by mortgage lenders during the period studied.

Many of the vacant properties that San Jose residents call to complain about are owned by lending companies that have foreclosed, Hannon said. As a result, he said his inspectors have created a database of contact names and numbers for the many different lenders responsible for foreclosure properties in the city.

"If you're a lender, the city expects you're going to maintain that property so it doesn't blight the community," he said. "Nowadays, a vacant building is an 'attractive nuisance,'"‰" that could lure vandals to the property, something the city and neighbors want to avoid.

Hannon said lenders that don't maintain their properties can be fined up to $1,000 for multiple violations, and will be charged for expenses and staff time if city contractors have to board up a house to keep it secure, for example.

(Click here to enlarge image)

"It's not fair to the citizens of the city of San Jose to have to pay for, essentially, property management," Hannon said.

From November 2007 to July 2008, the report said, 305 vacant houses were found to be in violation of the city's neglected vacant house ordinance. But as of the end of the July, only 92 still needed "abatement" of some kind.

Overall, Hannon said he feels "pretty good" about his division's ability to handle citizen complaints, which he said he relies upon and can respond to within 24 to 48 hours.

Krutko, who with Planning Department Director Joe Horwedel cosigned the report presented to Mayor Chuck Reed and the council in late August, said her department's top concern over the next six weeks will be determining the best use of funds that will be available to the city soon from the U.S. Department of Housing and Urban Development.

As part of a bill recently passed by Congress, local governments will be allocated money to help them address the foreclosure crisis. The amount of those allocations will be announced Sunday, and the city will have 30 days to submit a plan to HUD for approval.

Krutko said she is seeking clarification from HUD on what kinds of programs the funds can be used for. She said her current understanding is that the money cannot be used to help owners stave off foreclosure; it must be used to mitigate foreclosures that already have happened.

She said useful programs might include second-mortgage loans that would allow first-time buyers to purchase bank-owned foreclosures, or assistance for renters who have been displaced after their landlord was foreclosed upon.

Additionally, Krutko said the city is hoping to organize more city-sponsored foreclosure-prevention fairs at which lenders can offer on-the-spot loan modifications or other assistance to owners trying to stay in their homes. One such event held Aug. 20 at Independence High School was attended by an estimated 400 people. Krutko called it "very successful."

Jaime Alvarado, executive director of Somos Mayfair, a community organization in San Jose's Mayfair neighborhood — and in one of the report's hardest-hit ZIP codes — said the city's efforts to prevent blight from vacant homes seems in his area to be working.

"In Mayfair, so far, so good, but it's still early. Everyday, there are more and more houses vacant."

Back to where I was