Attention homebuyers: “Abandoned” or “vacant” houses are selling for $1.

No. This is not a gimmick.

A 92-year-old bungalow near Goodyear Heights Metro Park in Akron sold for $1 at sheriff’s sale on Dec. 16. The home at 483 Larkin Ave. was the first to sell so cheaply in Summit County since state lawmakers this summer tweaked the laws governing public auctions.

The buyer, Citizens Bank, was the mortgage lender that pushed the homeowner into foreclosure. It had successfully petitioned a county judge to order the sheriff to evict the woman who lived there.

She’d moved in recently to take care of her ailing mother, Margaret Havansky, who had lived there since 1993. Public records show Havansky took out a second mortgage and line of credit on the home in 2003. She had paid off all but $7,252.45 of the $30,000 loan when she died in September 2015.

“The bank owned that house, and the mother got sick. The daughter had three kids,” said Jeff Arthurs, a neighbor who keeps a close eye on neighboring homes along Larkin Avenue. “Long story short, she got sick and the medical bills just piled up. These were nice Christian people.”

One bill that continued to pile up after Havansky’s death was the mortgage. Court records filed by Johna Bella, a Toledo attorney representing Citizens Bank, indicate that the lender added $4,450 in the 10 months after Havansky died.

Bella did not return phone calls seeking comment for this story. The daughter, who was targeted in the foreclosure suit, also wished not to get involved. A spokesman for Citizens Bank issued a general statement but declined to comment on this case.

Arthurs, the concerned neighbor, said the bank offered the daughter “some ridiculous” price for the home. Months later, after the bank foreclosed, a man showed up to take pictures. Arthurs asked him what he was doing.

“He said mind your own business,” recalled Arthurs, who has a time-stamped cellphone picture of the man holding up a middle finger as proof of the encounter.

Citizens Bank said it does not comment on interactions with neighbors.

Not able to pay, the daughter — who did not have an attorney, like 90 percent of Ohioans facing foreclosure — was ordered to vacate the “vacant” home.

And vacant homes, according to state law, can now sell for less than two-thirds of the appraised value at sheriff’s sale. Before the new law, the bank may not have bought the property, which would have been donated to a public land bank to be returned to the community. Or it might have just sat there, a “zombie title” — the bank declaring it untenable to pursue the debt or own an abandoned home, which can carry housing code violations and cost more to maintain or fix up than it’s worth.

Records show no one challenged the $1 bid by Citizens Bank. “Holy shit,” said Adeline Miller, who rents next door to the house. “I’ve got $2.”

Arthurs, who resided and installed central air in his house (his investment), wasn’t happy to hear homes on his street are selling that cheaply even if real estate agents do disregard the price as an anomaly.

Flip ’em

Opponents and advocates of the new state law, dubbed the “fast-track foreclosure bill,” say its implications are wide-ranging.

Inserted into a broader budget review bill (House Bill 390), it was supported by Democrats, Republicans, attorneys representing borrowers and the Ohio Mortgage Bankers Association.

Everyone agreed that abandoned properties with homes should not be left to languish. They attract crime. Copper pipes and aluminum siding vanish. Gutters back up, and roofs can leak.

The new law decreases the time vacant or abandoned properties are tied up in foreclosure suits from two or three years to as little as six months, returning them to market with more of their value intact.

Most say the bill is seven or eight years too late. A glut of abandoned property foreclosures clogged the court system after the housing market crash, fueled by a double whammy of risky mortgages and a whopper of a financial crisis.

By expediting vacant foreclosures, attorneys who represent borrowers, like former Ohio Attorney General Marc Dann, can spend more time on cases in which debtors are fighting to keep their homes.

“Here’s the theory,” said Dann, “the idea is this: Let’s move the abandoned properties to the front of the line, and for those who are trying to save their homes, that will give us more time to slow the process down and reach a resolution with the mortgage lender.”

Sticker shock

No one said homes would actually sell for $1.

The Plain Dealer reported in October that Dustin Holfinger, who lobbied for the bill on behalf of the Ohio Bankers League, “dismissed the idea that investors will be snapping up houses for as little as a $1 — a fear of community groups.”

Weeks after the December sale, Holfinger told the Akron Beacon Journal/Ohio.com: “Unfortunately, the market is going to dictate some of these properties being sold for a dollar. That’s going to be the reality in some of these cases.”

In an email, spokesman Gabe Martinez said: “Citizens Bank does not comment on individual foreclosures. In a small number of cases when there are no other bids during an auction, the bank may acquire the home for a nominal fee and write off the value of the loan.”

In the past, paying two-thirds of the appraised value decreased the amount owed by borrowers. Now, the bank can buy the property and still collect all but $1 of what is owed after the foreclosure in what is called a deficiency judgment.

“I have not found one case in Ohio, let alone another state, where a lender has gone after a home­owner on a deficiency judgment,” said Rep. Jonathan Dever, a Republican attorney who introduced the fast-track foreclosure bill after years of representing borrowers in the Cincinnati area.

High deficiency judgments can push homeowners into bankruptcy. But even opponents of the new law say banks consider them uncollectible. Dever said only if someone other than the lender buys the property at auction would a deficiency judgment remain high. This is because lenders who successfully bid at auction would then sell the property, and the price of that sale would — like the prior two-thirds bid — decrease the mortgage owed.

Not so fast

Dever said House Bill 463, which passed in December, will strengthen the new law by requiring all bidders, including the lenders who initiate foreclosure lawsuits and tend to be the only buyers to show up at sheriff’s auctions, to pay at least enough to cover back taxes and court costs. (A previous version of this story did not distinguish that the rules for paying back taxes differ for lenders and other buyers.)

Dever stressed that the law does not apply to foreclosure on owner-occupied homes.

But there are still a couple of provisions that are causing concern.

The homeowner, who has defaulted on the mortgage, can now be charged with a misdemeanor crime for damages occurring after the lender initiates the foreclosure. This presents a legal quandary: Can a person who legally owns the home be charged with ruining it?

Also, expediting the process could backfire, said Frank Ford, senior policy adviser at the Western Reserve Land Conservancy, a housing advocacy group in Summit County and Northeast Ohio. Pushing down the purchase price of homes could affect nearby home values and invite irresponsible buyers looking to make a quick buck by polishing and flipping a diamond in the rough.

“In a perfect world, yes, getting them [back on the market] under any circumstances would appear to be a good thing, but if you’re only attracting the bottom feeders,” Ford said, “they’re either people who do not know what they are doing or have no intent to bring the property back to a stable position in the community.”

Citizens Bank has turned over the house at 483 Larkin Ave. to Freddie Mac (Federal Home Loan Mortgage Corp., a government-backed mortgage holder and seller.) Who Freddie Mac sells the home to could mean reinvestment or disappointment for neighbors.

Ford studied the impact of cheap sheriff’s sales — often for less than $500 apiece — of 2,281 Cuyahoga County properties that were pushed into foreclosure since 2010 because of back taxes, not mortgage defaults. Ford’s team discovered that, as of 2016, 66 percent of the properties are either again behind $1,000 or more on taxes, condemned, demolished and vacant, or considered to be in worse shape when the Western Reserve Land Conservancy took an inventory of Cleveland homes in 2015.

On the upside, Dever said cheaper sales mean the banks no longer have to tie up thousands of dollars — on top of the money they lent out in the mortgage — to move a property and write off their losses. On the other hand, the more the outstanding debt at the end of the day, the more the bank can collect through mortgage insurance.

“You’ve got to take into account the full picture,” said James Thurston with the Ohio Bankers League. “If you’ve got a property that is going to deteriorate, then it might make sense to pay less.”

This story has been updated to reflect that buyers must pay back taxes and court costs as part of the sheriff’s sale. These costs can be put off until the next billing cycle for buyers who are also the lenders that initiated the foreclosure lawsuit. This disparity, Rep. Jonathan Dever (R-Madeira) said, has been addressed in House Bill 463, which was signed by the governor on Dec. 22 and updates foreclosure law.

Doug Livingston can be reached at 330-996-3792 or dlivingston@thebeaconjournal.com. Follow on Twitter: @ABJDoug .