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HomeMy WebLinkAboutAgenda - 11-07-2024; 12-5 - Information Item - Memorandum - Overview of Foreclosure Procedure and Foreclosure Activity & History Graph ORANGE COUNTY NORTH CAROLINA HUMAN RESOURCES Nancy Freeman, Director 1 228 South Churton Street, Hillsborough, NC 27278 1 919.245.2735 TO: Orange County Board of Commissioners CC: Travis Myren, County Manager FROM: Nancy Freeman, Tax Administration Director RE: Overview of Foreclosure Procedure and Foreclosure Activity & History Graph DATE: October 14, 2024 This information is provided to give an overview of the foreclosure procedures that are followed in the Orange County Tax Office. Additionally, the purpose is to provide a more transparent view of how foreclosure is used, and what the history of foreclosures looks like in Orange County. Unpaid real estate accounts are required to be advertised in local newspapers per NC General Statute §105- 369. Even though a taxing jurisdiction will not complete foreclosure on the majority of these delinquent notices, they are required to publish the advertisement in accordance with the statute, and it must be done between March 1 and June 30 after the bill becomes delinquent. This is the first step in the foreclosure process. We mail about 1,700-1,800 advertisement notices each year. The In Rem Foreclosure Method is used by our office and detailed in NC General Statute §105-375. Orange County and about 20 other counties in North Carolina use the In Rem Method of foreclosure. In Orange County, there are multiple years owed on the property before it is reviewed and considered for foreclosure. We exhaust every other method of collection available before beginning foreclosure proceedings. Process summary: • Tax Lien Advertisement is published. • Attempt enforced collection remedies: payment arrangements,wage garnishments, bank attachments, rent attachments, levies. • Staff conducts a title search. This may take two-three months of consistent research to complete Family Trees and attempt to gather all necessary information for notification purposes. • 30-Day notice is sent by certified mail. • If confirmation that certified mail has been delivered to all parties is not received, a legal notice is published for two weeks. At this point we are usually into month three. Orange County Government I www.orangecountync.gov 1 919.732.8181 2 ORANGE COUNTY NORTH CAROLINA HUMAN RESOURCES Nancy Freeman, Director 1 228 South Churton Street, Hillsborough, NC 27278 1 919.245.2735 • Staff must docket the judgment. By law, we wait three months before moving forward. • At about Month Six, possibly Seven or Eight: We schedule the tax sale. This must be scheduled at least 45 days in the future for notification purposes. • Tax Foreclosure sale is held. • Upset period begins—this period can go on for months. Most tax foreclosures sales in Orange County take approximately 6-8 months from start to sale in the best- case scenario. Often a foreclosure initiated in a calendar year is not completed until the next calendar year. Approximately 65% are paid in full AFTER the foreclosure process has been initiated but BEFORE the actual tax foreclosure sale occurs. Orange County has acquired 7 parcels via tax foreclosure since 2002. Approximately 45 parcels were sold during the years 2002-2014. Since 2015, 33 properties have been sold. Considering that we send out 1,800 advertisement notices annually, the number of properties sold at foreclosure is very low. Foreclosure is generally reserved as the last resort action for a tax collector. Tax collection professionals are encouraged to use enforced collection remedies in this order: payment arrangements, wage garnishments, bank attachments, rent attachments, levies, and finally foreclosure. Tax collectors are encouraged to closely review any parcel before proceeding with tax foreclosure. A graph is attached to provide a ten-year history of foreclosure data in Orange County. It includes an annual breakdown of the number of foreclosures that were initiated (title searches completed), the number of parcels sold at foreclosure, and the number of foreclosures that were paid before the foreclosure sale. This graph will be updated and submitted monthly with the Monthly Enforced Collections Spreadsheet. To get a true picture of the foreclosure proceedings and its impact on collections, and because it is a lengthy process, it is important to see all three of these measurements together. Typically, foreclosure sales are scheduled every few months, so there will not be frequent changes in the Number of Parcels Sold at Foreclosure. In addition, the language in the Monthly Enforced Collections spreadsheet has been updated to match the language in the graph (changed from "Foreclosures Initiated" to "Foreclosure Title Searches Completed"). Orange County Government I www.orangecountync.gov 1 919.732.8181 ORANGE COUNTY NORTH CAROLINA HUMAN RESOURCES Nancy Freeman, Director 1 228 South Churton Street, Hillsborough, NC 27278 1 919.245.2735 The additional graph, updated monthly, along with the change in the language on the Enforced Collections Report should provide a clearer view of how foreclosures are conducted, and the results of the foreclosures that are initiated in Orange County. Orange County Government I www.orangecountync.gov 1 919.732.8181 4 Orange County Foreclosures 10 5 0 110 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 ■TITLE SEARCHES COMPLETED ■PARCELS SOLD AT FORECLOSURE ■TAXES PAID PRIOR TO FORECLOSURE *Approximately 45 parcels were sold during the years 2002-2014. *Orange County has acquired 7 parcels via tax foreclosure since 2002. **Foreclosure processes generally take six months therefore properties are often auctioned in the following calendar year.