(Aug. 30, 2013) Although the resort has been hit relatively lightly by the foreclosure crisis, the Town of Ocean City has recently struggled with at least one defaulted property that has not been maintained by its owners.
According to the city’s Director of Planning and Community Development Matt Margotta, city work crews have mowed the unkempt lawn and shored up the deteriorating structure at a property located on Fiesta Road in the Caine Woods neighborhood in North Ocean City.
“If it gets to the point where we have to send one of our crews out, we essentially put a lien on the property,” Margotta said. “When the house is sold, or whatever its disposition might be, we’ll get our money back for the work we did.”
The home has been in financial straits for some time, Margotta said, and the city was previously successful in contacting the responsible agency whenever complaints arose about the property’s condition. However, it is unknown if the legal responsibility for the property is still in the hands of a private owner, or if ownership has defaulted to the bank. The original holder of the mortgage is deceased, Margotta said.
“My guys are still doing the research on who is the responsible person, because it is technically whoever is running the estate,” he noted.
During the recent real estate crisis, banks would frequently sell “bad debt” that they knew could not be repaid to other holders for far less than its estimated value. This equity would then be leveraged for other transactions outside those of the original issuer of the mortgage.
Margotta said the company responsible for the mortgage on the property has recently changed, forcing the city to start a new relationship to try to get the property cleaned up.
“What had changed was the mortgage service company,” Margotta said. “We were dealing with new people who, for lack of a better term, were giving us the run-around. We kind of had to start the process over again to figure out who’s responsible.”
Given that the property had become a potential health hazard, the city stepped in. Concerns, Margotta said, included possible rodent infestation in the yard and structure, as well as risk of roof collapse.
“People will likely still complain about it being an eyesore, but that’s not the angle we take,” Margotta said. “We’re here to prevent it from being a public safety issue.”
Despite the resort’s high density of second homes, the real estate crisis seemed to have caused less of an issue in Ocean City than it did in other areas of the county, like Florida, where Margotta worked previously.
“In Florida, this was a much bigger issue,” he said. “There are whole swaths of neighborhoods with foreclosed homes that were getting into questionable shape.”
According to local realtor Dave Whittington, who deals with a number of properties that are being foreclosed or are already bank-owned, only 10 of the 960 properties currently for sale in the resort are foreclosures. A total of 25 have been sold this year, out of 599 total sales.
“Surprisingly, we don’t have that much of them here,” Whittington said. “Back in 2008 to 2009 there were more foreclosures, but it wasn’t a substantial amount to where it was driving our prices down.”