OSWEGO — A 2017 change to the county’s tax foreclosure rules is likely to lead to an increase in the number of foreclosed properties compared to previous years, and the Oswego County Land Bank is positioning itself to deal with the influx.
Oswego County officials could have more than triple the number of tax foreclosures in 2020 as previous years, largely due to a measure that cut the foreclosure process in half. The Oswego County Land Bank (OCLB), which was created in 2016, acquires most of its properties from the county following tax foreclosure and aims to improve the housing stock in Oswego County through a variety of means.
The faster foreclosure process and the hard deadline are the result of legislation approved by the Oswego County Legislature in September 2017. The local law allowed the county to take possession of residential properties after two years of non-payment of property taxes, rather than the four-year timeframe enacted in 1995.
Agricultural properties remain in a four-year foreclosure process.
County Treasurer Kevin Gardner said there are around 600 properties in Oswego County that are on track to be foreclosed. Normally, Gardner said, around this time in years past, that number was about 150. Gardner said approximately one-third of the properties in foreclosure are on the old four-year track.
Homeowners who are in danger of being foreclosed on have until Jan. 31 to pay their back taxes or get on a payment plan. OCLB President Shane Broadwell said this is a “hard deadline.”
Once that deadline passes, the county will move toward taking over the title for all of the properties that still have back taxes owed.
Gardner told OCLB officials that the county can come up with contracts with individuals that owe back taxes to the county to pay off the debt on their property, and that 85 have already been created in the first three weeks of 2020. That’s nearly a third of the amount the county normally creates in a full year. Property owners who default on the contracts go back into foreclosure, although Gardener said the default rate on those contracts is only around 5 percent.
County officials plan to hold a county property auction in May to sell a majority of the properties that are still viable for inhabitance.
Broadwell said for some properties, it won’t be their first appearance in the auction.
“There are some properties that will probably be coming back to the auction that are so bad that nobody wants them,” Broadwell said. “They’re the biggest drag or cancer in any town. That’s where we can play a role in taking the worst of the worst because we know now that nobody else is going to want that property.”
Officials in 2017 said the four-year foreclosure process forced county taxpayers to foot a bill of more than $6 million each year. The roughly $6.5 million of deferred tax revenue essentially was county taxpayer dollars paid to towns, villages and school districts to make up for property owners who didn’t pay their taxes.
Officials at the time also noted homeowners who pass the second year without making payments typically continue to struggle into the third and fourth years, and the properties tend to deteriorate significantly during the four-year process.
The massive influx in foreclosure properties is in part due to the first batch of two-year foreclosures coinciding with one of the final four-year processes. OCLB officials said the influx would likely happen again next year when the last of the four-year track properties come to the end of the foreclosure process.
Land Bank officials have each of the last several years requested properties bound for tax auction from the county, and the county Legislature has approved the requests. Following acquisition, the organization acquires properties and typically performs renovations or other improvements before selling the properties, all in an effort to increase property values and improve neighborhoods.
OCLB officials also discussed the possibility of acquiring properties through means other than tax foreclosure. By purchasing properties with their own funds, Broadwell said they would be able to work on properties faster without having to wait for the foreclosure process to conclude.
“Rather than waiting for it through a foreclosure, which takes a long time, there’s a lot of those properties out there in certain areas that you can significantly play a role in increasing the neighborhood value by purchasing (properties) at a low cost,” Broadwell said.