The sewer authority — no longer under city control — has filed a flurry of lawsuits to foreclose on homes like this one on Dixwell Avenue.
The authority, the Greater New Haven Water Pollution Control Authority (WPCA), has filed more than 125 lawsuits to foreclose on New Haven properties since the middle of 2005.
That was when the city, partly because it was looking for short-term budget dough, spun off the agency into an independent, suburban-dominated entity.
In order to boost a 92 percent collection rate that has cost it $1 million in lost revenue, the authority has decided to take an aggressive tack on debt collection. Its new policy includes slapping foreclosure suits on properties owing just $1,000 in back bills — or even less, if bills are more than three months old.
According to court records, Cisse Kay Washington owed just $793.10 on the building pictured above at 317 Dixwell Ave., where her family live and run Cisse Kay International African Hair Braiding. The debt extended back to mid-2005; the house is appraised at $260,000.
The WPCA filed suit on Sept. 16, 2007, to take over the property. The case is pending; the family has engaged the services of Yale Law School’s free clinic.
Washington’s daughter Adja, who preferred not to be photographed or to discuss the family’s financial situation, said Thursday that her mother, who’s 38, is in the hospital. She said the family lives above the hair-braiding shop.
Adja is running the shop in her mother’s absence. She said the family has “the lawyers taking care of” the WPCA suit. Still, she’s concerned, she said, because “anything can happen.”
The WPCA’s tactics have earned the ire of at least one judge overseeing some of the cases, Anthony DeMayo.
“By statute they have a right to do it. There’s a limit to what I can tell them,” DeMayo said in a conversation. “I’m very unhappy, to say the least. [These foreclosure suits] come at a time when most people are having trouble anyway. This doesn’t appear to be the climate to go after these [small] balances. The way these balances pile up, I fear” more families will lose their homes.
“There are other ways of collecting debt. Small claims court is where people should collect on debts, not foreclosure,” said Patricia Kaplan, executive director of New Haven Legal Assistance, which represents several of the WPCA’s foreclosure targets. “If we were talking about thousands of dollars, that would be one thing. But $1,500?”
The WPCA’s foreclosure tear comes at a delicate time for New Haven, and for City Hall. New Haven saw an 80 percent rise in foreclosures last year. Another steep increase is anticipated this coming year, as a sub-prime lending crisis sweeps the nation and drags conventional lenders in its wake. Mayor John DeStefano and Board of Aldermen President Carl Goldfield vow to tackle the foreclosure crisis as a top priority in the coming year in order to keep families in their homes.
It turns out one of the most aggressive foreclosure-initiators is an agency City Hall used to control but no longer does. While none of the WPCA’s suits has yet led to its actually seizing a home or having it sold at auction, the filing suit piles court and attorney’s fees — sometimes double or more the original debts — on families or investors already struggling to keep their properties.
New Haven: Ground Zero
The precise number of properties on which the WPCA has initiated foreclosure lawsuits is unclear. In response to an Independent inquiry, the agency instructed one of its law firms to collect all the information it has. The firm put together a spreadsheet of data from four different law firms which handle bad-debt cases for the authority.
Because the different firms report the data differently, there’s no one uniform way to tabulate the numbers in the spreadsheet. However, the spreadsheet does show that the authority has referred 372 collection cases to its law firms since regionalizing in mid-2005.
And it shows that lawyers filed a minimum of 158 foreclosure lawsuits out of that portfolio in the four municipalities in which the WPCA does business (New Haven, East Haven, Hamden and Woodbridge). And 128 of those 158 suits targeted New Haven properties.
Click here to review the spreadsheet provided by the WPCA’s counsel.
(And double-check our math, if you feel inspired. A guide: Lawrence C. Sgrignari of the law firm Gesmonde, Pietrosimone & Sgrignari, who put together the spreadsheet, said to count any line with a date entered in the “Date Complaint Filed” as representing a foreclosure suit. The same holds true for lines without a date listed but with the phrase “In Suit” or “Suit Instituted” in the “Status Code” column. He said he didn’t know which of the other “Paid In Full” cases involved court filings.)
The alternative to chasing after these bad debts aggressively is to stick other ratepayers with the bill, said Dominick DiGangi (at right in photo), who runs the WPCA.
“When you don’t pay your bill, everyone else is paying for it” through higher rates, DiGangi said.
“We’re not trying to take people’s homes. I want the bills paid, in fairness to the other 50,000 customers.”
DiGangi said the WPCA has had to write off more than $1 million in uncollected debt over three years. It collection rate lags at 92 percent. To up collections, the authority started communicating more with debtors and trying to work out payment plans — in addition to instituting a policy of filing foreclosure lawsuits once a ratepayer’s debt reaches $1,000 or falls 90 days in arrears.
A review of WPCA foreclosure suits on file at State Superior Court revealed a range of targets, from homeowners and small-business owners to out-of-state landlords or local real-estate investors like developer Wendell Harp. (Click here to read about his WPCA case. Another target of a WPCA suit is an investor named Marlene Esposito, some of whose family’s New Haven real estate dealings were detailed in this story.)
In some cases debtors starting out with $1,000 or less in debt ended up owing double that or more once cases dragged on, after counting the 18 percent annual interest charged, court costs, marshal fees, and especially lawyers’ bills. Most of the debts in the cases sampled stood at well under $2,000 before foreclosure proceedings began.
Amanda Evans and John Harrison, for instance, were on the hook for $1,750 in legal fees to the WPCA’s attorney, Louis Crisci of East Haven, to save a property on Ella Grasso Boulevard. The principal owed was $1,281.
The WPCA won a judgment of foreclosure by sale on that property. An auction was set for Dec. 29. But, Evans said, she worked out a payback agreement.
While some other cases have progressed that far, DiGangi said he knows of no instance in which a house has actually been sold.
He acknowledged that the filing of a suit immediately drives up the cost to the debtor and can exceed the original debt.
“It’s a problem,” he said. “We recognize that.” But the WPCA lacks many alternative options, he claimed. Unlike the water company, for instance, it can’t shut off service to customers. And if city government moves to foreclosure on a property for back taxes before the WPCA acts, the WPCA loses its priority position in reclaiming money owed.
That becomes important in cases of strict foreclosure — when the debt is more than the value of the property. However that is usually not the case with houses in New Haven. For instance, out of 600 foreclosures the city government initiated in 2007 to recover back taxes, only 10 were strict foreclosures — and seven of them were empty lots, not houses, according to Tax Collector C.J. Cuticello.
RWA’s Different Tack
City budget chief Lawrence Rusconi said he sympathizes with the WPCA’s plight. Rusconi used to do work for the WPCA at his old accounting firm, when the WPCA was a city agency. Even then, in the 1990s, the WPCA struggled with collection problems, he said.
However another utility does take a different approach to debt. The Regional Water Authority hasn’t sued anyone for foreclosure since Feb. 25, 1992, according to spokeswoman Joan Huwiler.
“It’s something we just don’t want to do, because it’s too costly,” Huwiler said. The authority does place liens on properties if necessary. It works out payment plans with debtors and generally tries to “find ways to help people pay.”
New Haven city government offers credit counseling to people behind on their tax bills and repeatedly contacts them before resorting to foreclosure suits, Tax Collector Cuticello said.
Jason Bartlett (pictured) has seen both methods — the RWA’s and WPCA’s — up close. In both cases he went on payment plans to pay back bills. But only the WPCA went after two of his houses, and ran up his bills.
Bartlett, a state representative from Bethel (and former campaign manager to New Haven mayoral candidates Martin Looney and James Newton), said he owns four dwellings in the city. He fell behind on his bills, including his water and sewer bills. He hopes to close on a sale of one of his properties soon to pay off his outstanding balances, he said.
Bartlett worked out a payment plan with the RWA without a suit being filed. He worked out plans with the WPCA, too, he said — but first they filed foreclosure suits on his properties at 158 West St. (where Bartlett owed $1,200 in unpaid bills) and 44 Stevens St. (where he owed $3,145.86 in back bills and interest and court fees).
The latter property went to a judgment of foreclosure by sale before the payment plan was worked out. That brought the lawyers’ fees, for which Bartlett was responsible, to $1,750 for that one property alone.
“The WPCA will foreclose [on people] for less than $1,000. I don’t get that, “ Bartlett said. “I had to borrow money” just to pay the lawyers’ fees. “They told me if I didn’t pay tomorrow, they’d take the house. It’s a way for attorneys to make money.
“They can lien the house with foreclosing. That gets people’s attention. They just move on you. You are immediately paying an extra $500 to $600” that can soon mushroom to $1,500 or more.
WPCA’s DiGangi said the average WPCA bills runs only $150 every three months. “To get to $1,000, you’re more than likely two years without paying your bill.” And the WPCA needs to do something about it.
Read previous Independent coverage of New Haven’s foreclosure crisis:
• 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”
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.
all sorts of corporations are business practices are just completely out of control. when will people fight back?