Efforts to make a smarter Honolulu

Honolulu is, somewhat surprisingly, the 10th largest municipality in the United States. IBM is working with the local government to update its technology—to “build a smarter Honolulu,” as they would say. Here is an interesting video on efforts to provide data to citizens, and the results from those efforts, namely, citizen-created apps. A bus-tracker app is mentioned, and similar apps have been developed in other cities (there are enough apps tracking the CTA in Chicago that it has created, as Jacqui Cheng put it, a “battle of the CTA bus trackers“). The tsunami app is, however, more unique.

Vacant property registration continues to spread

file0001899021898I’ve been following vacant property registration ordinances since the start of this blog. Earlier this month I noted a recent working paper about these ordinances spearheaded by Dan Immergluck from Georgia Tech University, who has a long-term project tracking them. In that paper, he says, “As of May 2012, there were more than 550 local VPROs in the U.S., up from fewer than 20 in 2000 and less than 100 at the end of 2007.” (There is a podcast of him discussing the project that you can download here. And I’d like to add that Immergluck wrote an excellent book, Foreclosed: High-Risk Lending, Deregulation, and the Undermining of America’s Mortgage Market, which anyone interesting in the mortgage crisis should read. It currently has 5 stars at Amazon.com.)

This month, the number of ordinances appears to be steadily rising, as a Google News search quickly turned up eight articles from this month alone about different ordinances under consideration, in six separate states! (And not all local governments post their activities in a readily searchable form.) The municipalities considering proposed registration ordinances include Springfield, Ohio; Cambridge, OhioDover, Delaware; Riverton, Pennsylvania; Richmond, California; Kern County, CaliforniaAuburn, New York; and St. Petersburg, Florida.

I hope that these ordinances work out for these municipalities, by which I mean I hope that they can maintain their vacant property stock and generate revenue. Jersey City, for example, recently revealed that it plans to add $250,000 with its new vacant property registration program. My only advice is that, as I’ve said before, vigorous enforcement of these laws by local officials is the sole way to bring in that kind of money.

Detroit on the verge of emergency management

detroitAccording to the Detroit Free Press, the word on the street is that Michigan’s Governor Snyder might appoint an emergency manager for Detroit—tomorrow. City officials are not excited; in fact, the “Detroit City Council launched an effort today to hire special outside counsel that could help mount a legal challenge to fight the potential appointment of an emergency financial manager for the city.”

According to one councilwoman quoted in the article, emergency managers “provide havens of hosanna for certain folks and their friends and family who get the contracts and the cities all lose their assets.”

I’ve previously ruminated on the legality of Michigan’s emergency-manager statute, which allows the state government to replace elected city officials. Remember, when it comes to municipality versus State,the State is generally supreme.

An emergency manager is still in control in my hometown of Flint, and the former elected officials haven’t been completely pushed aside; for example, the ousted mayor, Dayne Walling (a Rhodes Scholar), recently proposed a plan, in a “State of the City” speech earlier this month, to get Flint out from under control of the emergency manager. But Walling apparently doesn’t retain too much power, as his plan merely involves asking Governor Snyder “to appoint a transition advisory board to begin the process of shifting Flint away from an emergency manager’s control,” according to one local reporter.

New lawsuits against MERS

MERS_Logo_01_25_13I’m just catching up on a swarm of recent cases filed against Mortgage Electronic Registration Systems, Inc. (MERS), the privately owned mortgage registry that has, for some time now, been used by the mortgage industry in lieu of municipal recording systems (which were generally voluntary anyway). Gretchen Morgenson described the rationale for MERS in 2009:

For centuries, when a property changed hands, the transaction was submitted to county clerks who recorded it and filed it away. These records ensured that the history of a property’s ownership was complete and that the priority of multiple liens placed on the property — a mortgage and a home equity loan, for example — was accurate.

During the mortgage lending spree, however, home loans changed hands constantly. Those that ended up packaged inside of mortgage pools, for instance, were often involved in a dizzying series of transactions.

To avoid the costs and complexity of tracking all these exchanges, Fannie Mae, Freddie Mac and the mortgage industry set up MERS to record loan assignments electronically. This company didn’t own the mortgages it registered, but it was listed in public records either as a nominee for the actual owner of the note or as the original mortgage holder.

MERS has been accused, as Mortgenson noted, of keeping sloppy records about mortgage assignments, especially in cases when it tried to assert the rights of a foreclosing mortgagee without a record of an assignment of those rights.

Apparently, there has been a number of recent legal actions against the company, and these lawsuits fall into two categories. First, cities and counties are suing MERS alleging it was unjustly enriched because, by skipping public registration, it did not pay local recording fees. MERS has successfully defended itself against these challenges in at least five state so far, and Illinois may be next. The other lawsuits have been filed by foreclosed homeowners, alleging fraud and title claims, and MERS has been winning those cases as well.

A few years ago, in 2011, things did not look quite so rosy for MERS. At that time, Morgenson and Michael Powell wrote in the New York Times that MERS had been losing its court battles:

The Arkansas Supreme Court ruled last year that MERS could no longer file foreclosure proceedings there, because it does not actually make or service any loans. Last month in Utah, a local judge made the no-less-striking decision to let a homeowner rip up his mortgage and walk away debt-free. MERS had claimed ownership of the mortgage, but the judge did not recognize its legal standing.

And, on Long Island, a federal bankruptcy judge ruled in February that MERS could no longer act as an “agent” for the owners of mortgage notes. He acknowledged that his decision could erode the foundation of the mortgage business.

I plan to cover these cases more in depth later, but as a final note, I’d like to remind readers that MERS is not only in the mortgage registration game; it also has a system for registering vacant properties. I’ve warned before on this blog that municipalities might want to be cautious about partnering with an entity so closely linked to the mortgage industry, particularly when the municipality is seeking to hold mortgage companies responsible for maintaining vacant properties. I also made this warning in an article published in the Real Estate Law Journal, which retraces the history of MERS involvement with vacant property registration. I conclude with that discussion: Continue reading

Video about potential effects of city beautification

This TED Talk is a good reminder why big data, as David Brooks recently put it, is “good at some things and not at others.” In this talk, Edi Rama, mayor of Tirana, Albania, discusses how residents started to take responsibility for their city after he initiated beautification projects, and how he attributes decreases in corruption, littering, and tax deficiency to this new-found city pride. I don’t agree with everything he says, and it’s a long video, but I think that his point about civic pride is a good example of something data doesn’t always do well. It reminds me of Mayor Daley’s efforts to create beautiful public spaces (see here and here), such as Millennium Park, which is often hailed as a major success. A mayor looking only to hard data might not have pursued those projects.