The same record-keeping problems that led five of the nation's largest mortgage servicers to cough up $75 million to Ohio Attorney General Mike DeWine are complicating Delaware County's efforts to demolish blighted buildings with its Moving Ohio Forward grant money.
In September, Delaware County commissioners retained the Great American Title Agency to provide examination services and EnviroHab LLC to provide asbestos assessments prior to the demolitions.
Turns out the once-faulty titles are still faulty, said Assistant County Prosecutor Aric Hochstettler.
"We paid ($375) for title searches on the properties that were applicants to be demolished," Hochstettler told commissioners Thursday, Feb. 7. "Some of those searches are coming back with defects in the title, such as improperly released mortgages. That's something that happens quite a bit and actually was one of the reasons why there was a large settlement (between the servicers and the attorney general's office) to begin with."
Hochstettler said the defective titles probably pose minimum risk.
"The concern I would have if we move forward with demolishing properties for which there are title defects is that there is a remote chance that that could come back on the county in some way," he said, "and we cannot get reimbursement under the grant for any legal expenses we might incur."
If the titles are not rectified -- and some are beyond easy repair -- the county could be responsible for the money it's already spent on Great American's title searches, anywhere from $7,500 to $15,000.
"The downside is, and we'll have to clarify this with the (attorney general), but under the guidelines it states that we only get reimbursed for the title searches after the completion of the demolitions," Hochstettler said.
In some cases, local municipalities recommended the demolition of a long-standing eyesore; in others, property owners stepped forward and asked that their derelict buildings be included in the grant.
"So the property owners have a vested interest in getting rid of their (blighted) building," said Commissioner Gary Merrell.
Hochstettler concurred: "There's a benefit to the property owner. They have an incentive to clear this up. Their properties will be worth more after a demolition than they would be with the building still standing," he said. "This is not a mitigation program where the county is actually purchasing the properties in order to do the demolitions."
Hochstettler told commissioners he would proceed with caution "because this grant wasn't supposed to cost the county a dime. It was a zero-sum proposition."
Merrell said if money is lost on title searches, "that might just be the cost of doing business."