Moermond: I’m curious if you have an update on where you are at in the foreclosure
Hargrove: as of right now the main issue we’ve been having is the location. Being in
Ramsey County it makes it a bit different. Usually, we can shorten the redemption
period to five weeks. Ramsey County has 12 months.
Moermond: that isn’t true. If you are hearing that it must be due to another reason.
Dropps: this was a reverse mortgage, a HECM, and those do have a 12-month
redemption period. It is the only foreclosure that has that, outside of a federal tax
Moermond: so, it’s the type of loan, not the location.
Hargrove: in other counties we can petition for it to be shortened, but Ramsey County
doesn’t have that due to the type of loan.
Moermond: unusual. So, what is your lawyer talking about on timing?
Hargrove: right now the redemption period is set to expire August 9, 2023. That is when
it went to auction and reverted back with no bidders. We are stuck now in that
12-month timeframe. That was our concern about some of the level of repairs. We
want to maintain the property because it is in the best interest of everyone. Now we are
tied to this $109,000 bid we set at auction. The more we improve the property the value
increases but we’re only tied to being able to collect that $109,000 bid. We’re in a
tough spot financially.
Moermond: I understand Anthony Pilla has been deceased since 2019. It has been a
Hargrove: what happens with the HUD mortgages, it ensures that in the event the
originating loan company is unable to fulfill the payout made by the loan, HUD steps in
the continue the payments. Once the owner passes away and the loan goes into
default they then have an insurance policy that pays them their portion of their policy or
whatever they step forward to insure. They don’t start the foreclosure. The properties
we purchase pull reverse mortgages from HUD throughout the year. They deteriorate,
once they are paid out that claim, at some point they package them up and decide to
sell to smaller financial institutions like us. We didn’t take ownership of the mortgage
until January 2022. We immediately issued notices and the foreclosure took place
August 2022. We’re in California. There was 3 months before we realized something
was behind the placard and understood what needed to be done. The magnitude of the
repairs, we thought we could rehab and then our attorney told us know.
Moermond: this went into the Vacant Building program September 2021, not long after
Mr. Pilla passed.
Yannarelly: it was a Category 1 when it came in, but it upgraded to a 2 because it
wasn’t being taken care of.
Moermond: my question is if the City Council has the temperament to wait for a year to
see if it will be rehabbed. Certainly, the Code Compliance Inspection Report and steps
to maintain work in your favor. But I’m putting this out there that this is an exceedingly
long time. It may be in your best interest to have someone local come testify to
Council. What does your General Contractor tell you?