(Updated 1:35 p.m. with city response.) With no one to witness but hundreds of silent bidders lying in historic Union Cemetery across the way, a house on Fair Haven’s Bright Street was sold at foreclosure — for the second time in just three months.
The City Of New Haven foreclosed on #84 Bright for $3,540 in unpaid taxes. The house had already been foreclosed on just three months before, by Wells Fargo Bank. No one else bid.
Wells Fargo hasn’t bothered paying back the taxes since it took possession of the house on March 8.
Said attorney Gerald Still, who conducted the proceeding Saturday morning, “New Haven, like all the cities in Connecticut, just wants its taxes. They have programs to fund, and I don’t blame them.”
So the city’s action was against a whole array of plaintiffs, including the owner as of 1999, one Luke Wayne Smith, as well as Minneapolis-based Wells Fargo.
Smith had taken out a $175,000 mortgage in October, 2006, which ended up with Wells Fargo. When Smith defaulted a year later, Wells Fargo took title, but apparently just ignored the taxes.
The city initiated its action in January 2008 while Smith still had title. So Smith and the bank both were served with the papers, even though Smith, according to Still, was long gone. Wells Fargo was title holder by March but still out to lunch taxwise.
“The city doesn’t care who owes the taxes,” said Still, a New Havener who went to Hillhouse High and Hopkins but raised his family in Orange. . These days the attorney finds himself as on both sides of foreclosures, often bringing them on behalf of his commercial clients. “They want theirs. There are scores and scores of these going on.”
He said that on Friday the bank finally had reached the city and told the city’s attorney that the $3,540 would be paid. But by 4:30 on Friday, despite protestations that the money was in the mail — or in the wire — the funds had not been deposited in the city’s account.
That was why, on Saturday, Still conducted the proceeding for the benefit of the nearby necropolis. “I am under court order,” he said, “to conduct the sale by foreclosure because the value in the house is significant according to the appraiser. Would you pay $170,000 for this house?” Still said, pointing to the 1900s two-family structure, padlocked and forlorn.
The house was appraised at $170,000 in March. A second appraisal, in June, brought the number down to $167,000.
With no record of the bank’s overdue taxes deposited, the city showed up Saturday in the person of Still bearing its bid. That bid was for $12,250.
Where did that number come from? “I’m not quite sure, “ said Still. “It probably reflects the $,3540 taxes due, the costs for me and the foreclosure proceeding, and then the city’s costs for their hired attorneys to bring the action.”
In addition to the $3,540, the legal fees on a proceeding like Saturday’s, including advertising and sign construction usually don’t amount to more than $2,000. That means that the city has paid its hired foreclosure attorneys about $6,000 to $7,000 in order to take title. It’s expensive to collect those $3,540 in taxes, but apparently the city is so strapped it’s willing to pay double the amount to obtain it.
And it may not be over yet. As a result of the proceeding, the city is not automatically now in possession of 84 Bright St. The judge, said Still, first has to approve the Saturday morning sale. The court might feel, he added, that the house, valued at $167,000, was sold for too little. Wells Fargo could file a motion requesting as much.
As Still got in his car he said he didn’t think that would happen. Then what would?
“My guess is that this is all about a clerical error. In my experience it’s unusual that the bank would not pay its taxes even at the eleventh hour. What probably happened is that the $3,540 was wired, but, you know, it did not arrive in time to be formally posted. So it just wasn’t registered in the city’s account and that’s why we’re here. By Monday morning, the city will likely have received its money, and the bank will own the house.”
What will they do with it? “The neighborhood is not bad,” said Still, pointing to the St. Francis church on Ferry that backs into it and a large parking lot to the north. All the bank has to do is find buyers who enjoy the vista of the graveyard.
Reached on Monday, Tax Collector C.J. Cuticello said that as part of the judgment, the city will recoup past taxes plus all their costs, to the tune of $12,130, That is, not just the committee attorney who conducted the sale, but the fees of the lawyers who did the foreclosing. That is all the attorneys’ fees. The city redeems its taxes and expenses and the bank redeems the property, to which they now hold title.
Cuticello said the city is still waiting to receive the money but this is not uncommon.
Next steps? Cuticello said the current tax due is $3,739.48. It’s due by Aug. 1. Does he think Wells Fargo will pay? “Absolutely,” was the answer
Previous Independent coverage of New Haven’s foreclosure crisis:
‚Ä¢ After Foreclosure, W’ville Owner Still Hopes To Sell
‚Ä¢ He’s Not Buying, Yet
• Quiet Foreclosure on Porter Street
• 3 Minutes Too Late
• Historic Gambardella Property Foreclosed
•2 Homes Lost, 1 Gained
‚Ä¢ “Everybody’s Got To Eat”
• More Foreclosures, More Signs
‚Ä¢ Foreclosure Sale Benefits Archie Moore’s
• Rescue Squad Swings Into Action
• A Bidder Shows Up
‚Ä¢ Bank Beats Tanya’s Bid
• Westville Auction Draws A Crowd
• DeStefano: Foreclosure Plan Ready
• Can They Help?
‚Ä¢ “We Should Over-Regulate These Bastards”
• Rosa Hears of Rescues
• WPCA Grilled on Foreclosures
‚Ä¢ WPCA’s Targets Struggle To Dig Out
• Sue The Subprimers?
• WPCA Hearing Delayed
‚Ä¢ Megna’s “Blood Boils” at WPCA Tactics
• Goldfield Wants WPCA Answers
• 2 Days, 8 Foreclosure Suits
• WPCA Goes On Foreclosure Binge
• A Guru Weighs In
• WPCA Targets Church
• Subprime Mess Targeted
‚Ä¢ Renters Caught In Foreclosure King’s Fall
‚Ä¢ She’s One Of 1,150 In The Foreclosure Mill
‚Ä¢ Foreclosures Threaten Perrotti’s Empire
‚Ä¢“I’m Not Going To Lay Down And Let Them Take My House”
‚Ä¢ Struggling Couple Sues Over “Scam”
The following links are to various materials and brochures designed to help homeowners avoid foreclosure.
How to prepare a complaint to the Department of Banking; Department of Banking Online Assistance Form; Connecticut Department of Banking, Avoiding Foreclosure; FDIC Consumer News; Statewide Legal Services of Connecticut, Inc; Connecticut Bar Association Lawyer Referral Service.
For lawyer referral services in New Haven, call 562-5750 or visit this website. For the Department of Social Services (DSS) Eviction Foreclosure Prevention Program (EFPP), call 211 to see which community-based organization in the state serves your town.
Click here for information on foreclosure prevention efforts from Empower New Haven.