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State Fiscal Highlights
· No direct fiscal effect on the state.
Local Fiscal Highlights
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LOCAL GOVERNMENT |
FY 2010 – FUTURE YEARS |
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Courts/Clerks of Courts (courts of common pleas, municipal courts, and county courts) |
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Revenues |
Likely gain in additional foreclosure filing fees, with
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Expenditures |
Potential increase due to
notification and hearing procedures related to |
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County Recorders |
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Revenues |
- 0 - |
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Expenditures |
Potential increase due to additional foreclosure related responsibilities, annual magnitude uncertain |
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Boards of County Commissioners |
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Revenues |
- 0 - |
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Expenditures |
Potential, likely negligible, annual increase due to administrative procedures regarding land banks |
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County Prosecutors |
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Revenues |
- 0 - |
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Expenditures |
Potential, likely minimal, annual increase due to deed preparations |
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Note: For most local governments, the fiscal year is the calendar year. The school district fiscal year is July 1 through June 30. |
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· Courts/clerks of courts. The bill contains certain provisions that codify procedures and practices currently undertaken by the courts and the clerks of courts. Other provisions permit the courts and, by extension, the clerks, to take certain actions related to foreclosure proceedings. These permissive actions, if taken, could increase litigation-related expenditures for the courts and the clerks, the amount of which is uncertain and would vary from county to county. The bill also requires the clerk of a court of common pleas to charge an additional fee of $20 for each filing for a residential mortgage foreclosure action. Based on the current level of foreclosure activity, this additional fee could generate in excess of $1 million annually statewide.
· County recorders. The bill requires that if no lien holders to a property file a writ of execution, and the property owner does not redeem the property, then the title of such a property vests in the name of the county recorder. The recorder may then dispose of the property according to rules set forth by the board of county commissioners. These new responsibilities could generate additional administrative work for the recorder, the amount of which is uncertain and would vary from county to county.
· Boards of county commissioners. The bill requires that the board of county commissioners have rules in place to direct the county recorder to place any properties vested in the recorder's name in a land bank, in counties where one is available. If a county does not have a land bank, the board may direct the county recorder to dispose of the properties at its discretion. This provision could create some additional administrative work for the board of commissioners, though it is unlikely to notably increase expenditures.
· County prosecutor. If the courts take certain foreclosure-related actions, the bill requires the prosecutor prepare a deed vesting certain properties in the name of the county recorder. This could create some additional administrative work for the prosecutor, though it is difficult to predict how frequently all of the necessary actions that would trigger this provision might occur. It is unlikely that any related expenditures would exceed minimal.
· County sheriff. The bill allows notices for the sale of lands and tenements taken to be made electronically after the first attempt to sell. LSC fiscal staff has not yet had sufficient time to fully research the impact of this provision.
· Liens on forfeited tax foreclosed properties. The bill could result in a loss of revenue to local taxing units if properties foreclosed due to delinquent taxes are forfeited to a political subdivision, school district, or land bank free of taxes, assessment charges, penalties, interest, costs, and subordinate liens. The frequency and magnitude of such a loss will likely vary greatly over time and from place to place, and is thus difficult to predict.
Detailed Fiscal Analysis
Local fiscal effects
In researching the bill's fiscal implications, LSC fiscal staff spoke with multiple staff members of the Ohio Recorder's Association, Ohio Clerks of Courts Association, and the Ohio Judicial Conference as well as one staff member from the County Commissioner's Association of Ohio, and then a judge from the Judicial Conference's Civil Law and Procedure Committee. The analysis that follows is based on conversations with those individuals.
Courts/clerks of court
The bill appears to, in some instances, codify the courts' current procedures regarding foreclosure actions. Many of the provisions allow for the filing parties to take certain actions that may trigger responses from the clerks but nonetheless do not facilitate a measurable or direct impact on the clerk or the court.
Estimated revenue potential for select counties from additional filing fee
The bill directs the clerk of a court of common pleas to collect an additional fee of $20 for each filing for a residential mortgage foreclosure action. Table 1 below depicts the number of calendar year 2008 foreclosure filings in a sampling of various sized counties across the state and the amount of new revenue that would have been generated in those local jurisdictions if the additional foreclosure filing fee had been in effect at that time. Also noted in the table is that, based on the total number of new foreclosure cases filed in Ohio (85,773), this additional fee could have generated in excess of $1.7 million for counties statewide in 2008.
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Table 1. Additional
Revenue Gain from $20 Additional Filing Fee |
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County |
Census 2000 Population |
2008 New Foreclosure Filings |
Potential Additional Revenue |
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Cuyahoga |
1,393,978 |
13,858 |
$277,160 |
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Franklin |
1,068,978 |
9,305 |
$186,100 |
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Hamilton |
845,303 |
6,673 |
$133,460 |
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Lucas |
455,054 |
4,359 |
$87,180 |
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Butler |
332,807 |
2,987 |
$59,740 |
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Lorain |
284,664 |
2,442 |
$48,840 |
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Monroe |
15,180 |
38 |
$760 |
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Noble |
14,058 |
38 |
$760 |
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Vinton |
12,806 |
43 |
$860 |
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Statewide |
11,353,140 |
85,773 |
$1,715,460 |
Physical harm to property in foreclosure by owner
The bill states that a person, who is the owner of residential property and has received a summons and complaint in a residential mortgage foreclosure action, who knowingly causes physical harm to that property is guilty of vandalism. Under current law, vandalism is a felony of the fifth degree and is punishable by a fine of up to $2,500 in addition to between six and 12 months in prison. The fiscal impact of this provision remains somewhat unclear and largely depends on the number of people prosecuted and the sentence imposed. LSC fiscal staff has not yet had sufficient time to fully research the impact of this provision.
County recorders/county commissioners
Assuming title to a property
The bill provides for the recorders to take on a new role. According to the bill, if during a foreclosure proceeding, no lien holder to the property files a writ of execution, then the title to that property will vest in the name of the county recorder. It is then the duty of the recorder to dispose of the property according to rules adopted by the board of county commissioners.[1]
In talking with representatives of the County Recorder's Association, it became readily apparent that the county recorder does not currently assume the title to any property. As such, there are questions as to the procedural steps the recorder would take in assuming title to the property and then disposing of it. Some of the issues in question could have fiscal ramifications on the recorder and are not answered in the bill's current state. Those questions are:
· If a land bank is unavailable, could the recorder hold a real estate auction?
· If the answer to the question in the dot point above is yes, and the recorder sells a property, can the recorder recoup a percentage of the sale proceeds?
It appears as though some county recorders may lack the staff, both in number and in skill set, to adequately address this provision. Thus, it appears that the bill could: (1) add to the current duties undertaken by the recorder, (2) increase administrative expenditures and potentially staffing requirements of the recorder, and (3) represent an unfunded mandate for the recorder. Given this information, the potential fiscal impact on the recorder is uncertain and may vary from county to county.
County prosecuting attorney
If the courts opt to take certain foreclosure related actions which result in the deed to a property vesting in the name of the county recorder, the bill requires that the prosecutor prepare that deed. This would likely create some additional administrative work for the prosecutor, the magnitude and cost of which would vary according to the terms of the bill. It is unlikely that any related expenditures would exceed minimal.
County sheriff
Under current law, the officer taking the lands and tenements gives public notice of the date, time, and place of the sale for at least three weeks before the day of the sale by advertisement in a newspaper published and in general circulation of the county. The bill allows notices of subsequent sales of the lands and tenements to be made electronically on a web site maintained by the officer. LSC fiscal staff has not yet had sufficient time to fully research the impact of this provision.
Local taxing units
The bill provides that properties foreclosed due to delinquent taxes that are forfeited to a political subdivision, school district, or land bank are free of taxes, assessment charges, penalties, interest, costs, and subordinate liens. To the extent that this includes property tax liens, this provision could result in a loss of revenue to local taxing units that would otherwise have been entitled to those lien amounts had they been paid. The frequency and magnitude of such a loss will likely vary greatly over time and from place to place, and is thus difficult to predict.
State fiscal effects
The bill has no apparent direct fiscal impact on the state.
[1] The rules established by the board of county commissioners should specify that the property be placed in a land bank. If a land bank is not available, then the property shall be disposed of at the discretion of the board of county commissioners. A representative of the County Commissioners Association of Ohio indicated that the bill effectively has little to no fiscal impact on the board of county commissioners.
