A new legal process heralded as a game changer in tackling Baltimore’s vacant housing crisis got off to a halting start at a circuit court hearing Wednesday morning, underscoring that there are no easy fixes to the longstanding problem.
The new tool, called “judicial in rem foreclosure,” allows the city to obtain ownership of a vacant lot or building where the value of the property’s liens — unpaid property taxes, citations, and water bills — exceeds the value of the property. Ideally, city officials would then turn to trusted community developers or partners to remediate, rehabilitate or demolish the properties.
But the city’s attempt to acquire its first eight properties hit a speed bump Wednesday after a circuit court judge identified technical errors in the city housing department’s legal filings and notifications to owners, heirs, mortgage companies, lien holders and banks associated with the properties.
Judge Sara D. Walsh delayed action on all eight homes — which are located in Four By Four, a Northeast Baltimore neighborhood sandwiched between Clifton Park and Baltimore Cemetery. Hearings for additional properties have been scheduled as far out as March.
Officials remain confident that the process will live up to their expectations of moving several hundred vacant homes out of absentee ownership per year. But some housing advocates have questioned the city’s ability not only to adopt and implement a brand new procedure, but to find new owners for properties that may be more expensive to remediate than they are worth.
Enabled through a 2019 statewide law, “in rem” — a Latin legal term that means “against a thing” — is intended to help the city overcome a major hurdle to addressing its 15,000 vacant properties: getting them out of the hands of absentee owners who stand by as property tax bills go unpaid and building code violations pile up. City officials are aiming to prioritize homes in so-called impact investment areas, which already have been tapped for large-scale projects and major funding.
“Once courts and the development community understand how it works, we’re confident more properties can be broken from the cycle,” said Kim Graziani of the Center for Community Progress, which worked in partnership with the city to launch in rem, in an interview with The Banner earlier this year.
Typically the city has obtained some of these properties through the tax sale foreclosure process, in which bidders can purchase liens on properties with unpaid property taxes. If no one purchases the tax sale certificate, the city becomes the certificate holder and may obtain the title to the property by filing a foreclosure case. From there, officials can make the properties available to potential homeowners, community development organizations and for-profit developers to rehabilitate or redevelop them.
But that method of acquisition often takes years, leaving the city a step behind an ever-growing tally of vacant properties. The city owned just 1,116 vacant properties as of September 2022, and has steadily been reducing its inventory over the last decade.
City officials say the new process could shrink that timeline to around six to eight months from the date the city files a foreclosure case until it is awarded the title, according to the Department of Housing and Community Development. Thousands of properties could be eligible, according to Joe Kershner, managing attorney with the department. His current tally of identified eligible properties stands at about 600.
But Wednesday’s hearing showed that city officials have their work cut out for them to eliminate any clerical errors and meet their court-ordered responsibility to provide adequate notice to an often-long list of “interested parties” in the property. Those parties range from heirs of long-deceased homeowners, to defunct LLCs, to mortgage and lien holders across the country.
“That’s why this work is hard,” said City Councilwoman Odette Ramos, who helped introduce the enabling legislation at the state level in 2018 while she served as executive director of the Community Development Network of Maryland. “Every single house or lot has a story, and what we have to do is find everybody associated with the story and if they still want to deal with this house.”
Of the long list of parties contacted about the properties, two people called into the remote hearing. One elderly woman had received mobility service transport to the courthouse, saying she had not received the supplementary notice to the court summons that the hearing was remote-only. She said that she had already sold the property in question, though a deed was never recorded. One man called in to say that he was not sure why he’d received notice about another property; it turned out that he had been improperly named as a defendant in a years-old case regarding the property.
Overall, Ramos said she wasn’t discouraged by the hearings. She said Wednesday marked a “monumental” first step.
“This was the first one, so you always expect some hiccups along the way,” said Ramos. “I think this is going to be a great process; we just have to make sure that all of our t’s are crossed and i’s are dotted.”
Kate Edwards, deputy commissioner for development for the housing department, also said the first hearing will greatly inform the process later on. “It wasn’t totally unexpected that we would get this further instruction,” she said. “We’re still within what we thought the timeline would be.”
The launch of the new process was long-anticipated to be difficult. The housing department plans to hire four new attorneys and four new paralegals dedicated to filing in rem cases, on top of one new attorney who started last month. A court docket was established at the circuit court to handle the cases. The housing department even began ordering more reams of paper for all the related documentation, housing commissioner Alice Kennedy noted at a hearing in September.
When running at full capacity, the department hopes to file as many as 500 cases a year, according to Kershner. He and other housing officials believe the process will revolutionize the city’s approach to vacant and abandoned housing.
“In rem is a little bit of a silver bullet,” Kennedy said in an interview with The Banner in October. “This is a huge tool — it’s staff time, additional attorneys needed, but it does definitely reduce some of the money that’s needed either for private acquisition, condemnation, or eminent domain.”
Even if the department can overcome the legal and logistical hurdles, some advocates remain skeptical of the power of the new process to significantly alter the status quo.
“It is a tool that should exist inside of a policy toolkit that can be used when appropriate,” said Nneka N’namdi, the founder of nonprofit Fight Blight Bmore. “The reason that Baltimore has such a problem with vacancy isn’t the result of one policy, so for us to think that one policy is the solution, I think is a little naive.
More pointedly, N’namdi questions whether the city has adequately planned for what to do with the properties after acquiring them.
“What we don’t want is to go from concentrations of vacant properties that are privately owned to a concentration of vacant properties that are city-owned when the city doesn’t have the capacity to bring those properties into productive use,” said N’namdi. “In rem just could set us up for the city to be in more trouble in terms of its upkeep of properties that it owns.”
But city officials said they have already have started lining up buyers and potential developers to take over the derelict properties once the title is cleared.
“We’re trying to acquire blocks strategically,” said Edwards. “Provide development incentives to go along with those properties that we acquired, homeowner repair grants for homeowners that live on the block.”
Ramos said that the new process is one of several tools that the city needs to address the vacant housing crisis.
“This is a really important way to go, we just are going to need the capacity to deal with them,” Ramos said. “We have to be able to get them out the door.”