Foreclosure filings have soared 70 percent in New Haven so far this year—with just about the entire increase stemming from an explosion of cases brought by the Water Pollution Control Authority for as little as $1,000 in unpaid bills.
The Greater New Haven WPCA, which charges property owners for the disposal of wastewater, has filed about 150 foreclosure lawsuits on New Haven properties so far in 2012. That’s upwards of 50 percent more than WPCA filed in all of 2011, and more than three times as many as it filed in all of 2009.
The rise in foreclosure filings reprises a tactic that sparked community outrage against the WPCA as the foreclosure crisis got going in 2008 over its aggressive collection tactics. The WPCA drew the ire of a federal judge and the scrutiny of state and city officials for filing for foreclosure against people who owed as little as $793.10. Such aggressive collection practices can saddle property owners with even more debt—in legal fees—and make it harder for them to dig out. In some cases, a foreclosure filing by the WPCA can effectively double the amount of money a property owner owes.
The public outcry led the WPCA to back off for a few years. Now it has started filing more cases than it did at the height of its previous tear.
And it’s making it harder for already financially strapped people to stay above water. Carl Goldfield, a former alderman who criticized the WPCA’s tactics back in 2009, now represents one of the new foreclosure targets as a private attorney. He said the agency’s hard-ball attorneys quickly added their own fees to the case at such a rate that clients like his can end up paying more than twice what they owed the WPCA just to keep their homes.
The WPCA’s tactics set it apart from another utility, the regional water authority, which pursues debtors without filing foreclosure suits.
New Haven has limited options in responding to the tactics. New Haven used to run and control the WPCA. Then the city spun it off to a new suburban-dominated entity in 2005 in return for one-time cash to fill a budget hole. The Board of Aldermen does get to name a member of the WPCA’s nine-member board. The current aldermanic appointee is the East Shore’s Al Paollilo. Paolillo, who could not be reached for comment for this story, serves as the WPCA board’s vice-chair.
Sid Holbrook, director of the WPCA, said the increase in the agency’s foreclosure filings is “a reflection on the state of the economy”—people are having trouble paying their fees.
“We have to do what we have to do to collect what’s owed,” Holbrook said.
The WPCA’s policy is to initiate foreclosure procedures against any property owner who owes more than $1,000 in unpaid fees. Holbrook said the process is necessary so that fees don’t rise for other ratepayers.
Holbrook said the WPCA has never actually gone through with a foreclosure, despite all the filings. “What’s key to this is that we’ve never foreclosed on anybody.”
According to Karah Johnson of the Greater New Haven Community Loan Fund, foreclosures in New Haven were up 68.5 percent in the first quarter of 2012, jumping to 209 compared to 124 in the same quarter in 2011.
“In 2011 New Haven had 503 foreclosure filings, so we’re already well on our way to meeting and possibly exceeding those numbers,” Johnson said.
If you factor out the roughly 150 WPCA foreclosure filings this year, however, the foreclosure filing rate would be essentially flat from this year to last. In other words, much of the jump in foreclosure filings is simply a jump in WPCA filings.
According to figures provided by WPCA attorney Larry Sgrignari, the WPCA had submitted 150 foreclosure filings as of June 22, 2012, up from 97 in 2011, 75 in 2010, and 45 in 2009.
An accompanying spreadsheet lists a total of 181 addresses, 152 of which are in New Haven. The reason for the discrepancy? “Some of the properties listed are owned by the same individual or entity and I cannot confirm which of the properties are in foreclosure without a review of the actual files,” Sgrignari said.
While it might appear that WPCA foreclosure filings are on track to triple over last year, Sgrignari said that’s not likely to happen: “I believe most of the 2012 filings have been completed and I do not expect that there will be a new batch this year.”
Sgrignari and Holbrook gave two possible reasons for the increase in foreclosure filings: a bad economy and a change in the WPCA billing system.
“One of the reasons that there may have been a slight spike is that for a period of time there was a lull in them because WPCA converted their billing system,” Sgrignari said. “There was a period of time where there were very few referrals and as a result of that, there has been a kind of catch-up.”
That problem is compounded by a weak economy that has found more and more people falling behind on their fees, Sgrignari said. “The economic conditions caused a larger number of accounts to become delinquent, and the change in the billing system allowed those delinquent accounts to sit in suspense before referral to collection than would have normally occurred.”
Sgrignari said the WPCA’s foreclosure-filing policy is necessary to collect on “delinquent accounts.” In order to reach the $1,000 debt threshold, someone would have had to neglected to make quarterly payments for years, he said.
“Once referred to collection, the attorney assigned the file issues a demand letter to attempt resolution of the delinquency by payment arrangements over time before commencing the foreclosure,” Sgrignari wrote in an email. “If there is no response, the foreclosure process is then initiated. The Authority makes every effort to resolve the delinquency before initiating foreclosure.”
“The GNHWPCA believes it has a responsibility to all of its customers to take reasonable steps to collect on delinquent accounts as those steps are necessary to insure the best rate possible for providing the service that is required,” Sgrignari wrote. “To allow delinquent accounts to sit without collection is contrary to that policy. The Authority finds that there is a benefit to pursuing the collection of the accounts via the foreclosure process when all other avenues have been exhausted, and unlike the RWA does not have the ability to terminate service.”
The WPCA can put liens on a property, Sgrignari noted. “The liens, however, can only be enforced by commencing a foreclosure action similar to the process used to collect delinquent property taxes. Alternatively, the liens will simply sit there and accrue statutory interest, and if subordinate to a delinquent property tax lien can be lost in a tax foreclosure proceeding.”
Meanwhile, the South Central Connecticut Regional Water Authority (RWA), which is also in the business of providing water services to households, reported that it has never initiated a single foreclosure.
“We do have the right to foreclose,” said RWA spokeswoman Kate Powell. “However we choose not to. It’s just not a path that we want to go down. ... There’s not a lot of value in it for us.”
Unlike the RWA, the WPCA does not have the power to shut off the water if someone doesn’t pay his bill, Sgrignari said.
“Punitive” Over “Peanuts”
Attorney Carl Goldfield (pictured), the former president of the New Haven Board of Aldermen, represented one of the property owners against whom the WPCA filed for foreclosure this year. He said his client started off with just a small amount of money owed to the WPCA, but it quickly ballooned with legal fees.
“That seems punitive to me,” Goldfield said. He said that as a WPCA ratepayer he understands the need to collect on delinquent debtors. But there needs to be a better way to distinguish between the “bums” who avoid bills they could pay, and the people who are legitimately struggling to make ends meet.
Judith (who asked that her last name not be published, Goldfield’s client, said she’s 71 and lives in Hamden. She said she was laid off in February from her job at the Cornell Scott Hill Health Center, where she had been a counselor for the homeless for 10 years.
Judith said her 72-year-old husband pays all their bills online. “Both of us have ADHD. We never open our mail.” She acknowledged that’s a problem that has caused them to miss important events like weddings, because they never opened the invitation.
In this case, it caused them to miss WPCA bills. According to court records, Judith’s property was the subject of about $420 in liens dating back to June 2009.
Sgrignari said the total debt was much higher than that. “The account was referred first in 2009 at $1,297.38,” He wrote in an email. “Demand went out December 2009 for that amount plus a $300.00 Legal Fee. Click here to download a spreadsheet detailing the history of Judith’s unpaid fees.
“On Feb. 3, 2012 we sent a new demand letter for the then balance of $1,349.05. There was no response to our demand. On March 2, 2012 we ordered our title search. On March 19th, 2012 we forwarded a writ to the Marshal for service.”
In March, Judith was surprised to find a marshal at her door serving her with a foreclosure complaint. With Goldfield’s help, she set up a payment plan with the WPCA. She said she ended up owing nearly $3,000 once the process was complete. She and her husband paid $2,000 in lump sum and now are paying $100 a month, she said.
“I had to take it from my pension,” Judith said. “I had to take it from that and a little bit of my savings.”
Judith said she feels “lousy about it. ... I wake up and I can’t believe it.”
“I was really down this morning,” Judith said last week. She reflected on how many losses she’s had recently. She had pneumonia for eight months and she’s been battling fibromyalgia, she said. “$3,000 is a lot of money for us. ... We did everything we could do to fight it. It was all that we could do.”
“If it wasn’t for unemployment, I don’t think we’d survive at all,” she said.
“The legal fees on this thing were almost $1,500,” Goldfield said. Those legal fees can add up quickly, he said. They can include a title search, a marshal’s fee and attorney fees.
According to Sgrignari, the total due as of May 8 was $1,456. The additional legal fees broke down like this: “165.00 Title Search, 300.00 Court Entry, 292.00 State Marshal, 700.00 Legal, 53.00 Release.” That adds up to $1,510—more than the outstanding debt. Altogether, Judith was on the hook for $2,966.
Ballooning debt is also due to the WPCA’s 18 percent interest rate on unpaid fees.
“The interest rate is set by statute,” Sgrignari said. “It is 18 percent and based on the statute that deals with property tax delinquency. The Authority has no discretion over that. If a property owner disregards all of the delinquent notices and the pre-suit demand letter, the debt does increase significantly with the costs of foreclosure.”
“I have mixed feelings about this,” Goldfield said. “On the one hand, people don’t pay their water bill and it comes back to haunt all of us.” On the other hand, “I was just struck by the mismatch between the amount they owed and the amount they have to pay in legal fees.”
If the WPCA foreclosure-filing threshold is just $1,000, then the filing amounts to a 100 percent penalty, Goldfield said. “Once they start foreclosure, you’re not getting out of that thing for less than a thousand bucks.”
Attorney Irving Pinsky (pictured) is handling a WPCA foreclosure filing against his nephew, Moshe Pinsky. According to court filings, Moshe owes $1,712.63 to the WPCA.
“That’s peanuts,” Irving said. “We’ll pay that.”
“I assume they just need and want money,” Irving said of the WPCA.
Pinsky said a foreclosure filing can ruin someone’s credit. And it can serves can “cause intimidation” because “they tack on all sorts of fees” if you don’t pay.
“It looks like a whole lot of paperwork over nothing to me,” Pinsky said.
Previous articles about WPCA foreclosure filings:
WPCA Goes On Foreclosure Binge
WPCA Targets Church
2 Days, 8 Foreclosure Suits
Goldfield Wants WPCA Answers
Megna’s “Blood Boils” At WPCA Tactics
WPCA’s Targets Struggle To Dig Out
WPCA Grilled On Foreclosures
WPCA Urged To Tackle Marshal Fees
Sewer Agency Unloads House
WPCA Uproots Tenants, Too
Judge Forces WPCA To Give Mom A Chance
WPCA Fails To Uproot Family