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Bill to target abandoned-home epidemic in Indiana

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An Indiana lawmaker plans to file legislation next month to address an abandoned housing blight plaguing the state.

Sen. Jim Merritt, R-Indianapolis, wants to shorten the amount of time homes sit idle, as well as reduce the incentive investors get when they pay off tax liens on abandoned homes with little intention of actually purchasing the property. 

“This is a very complex issue. The bottom line is we want these homes being vacant for as short a time as possible,” Merritt said.

Most states, including Indiana, let speculative investors pay off delinquent tax bills on abandoned homes when they are offered at public auction. If the former occupant later decides to pay off the tax bill and keep claim on the property, that person is charged a penalty that goes to the investor. The penalty in Indiana is typically 10 percent of the tax bill amount.

Merritt said he’d like to reduce that return to investors, perhaps to 5 percent. That could discourage vacant-home investors whose only intention is to work the tax system, rather than to see a home improved and re-occupied.

“I want to see people have in interest in the home itself, not as a bank account or investment,” he said.

Another measure Merritt is contemplating would reduce the period during which a previous owner of a foreclosed home could make an offer to repurchase it. Currently, that period is one year, following a sheriff's sale.

Shortening that period to six months could reduce the amount of time a house is unoccupied. Merritt said it doesn’t happen often that a person who lost a home in foreclosure wants to buy it back, but there are occasions when that person’s financial situation improves shortly thereafter.

The proposed measures could receive serious attention during the short session of the Indiana General Assembly early next year. Merritt said the issue of abandoned homes is one that both sides of the aisle agree needs to be dealt with.

Merritt has been working on the issue since the 1980s.

Indiana Bankers Association head Joe DeHaven traced the origins of the glut of foreclosured and abandoned homes to the mid-1990s, when the state’s manufacturing sector began downsizing.

The problem intensified during the Great Recession. This year, the Indianapolis-Carmel area ranked No. 1 in the nation for the percentage of homes in the foreclosure process that had been abandoned, according to 24/7 Wall Street, using data from analytics firm RealtyTrac.

That amounted to 2,488 vacated homes, or one-in-three foreclosed homes in the metro area. Statewide, about 30 percent of the 16,618 foreclosed homes have been abandoned—or about 5,000 homes.

“These homes are poisonous to a neighborhood,” Merritt said. 

Some homes can’t be saved. Indiana officials are planning to ask the Treasury Department for permission to carve out some of the $222 million in federal funds earmarked for struggling Indiana homeowners to instead demolish houses that have deteriorated beyond repair.

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  • Yes, Matt
    There are more abandoned houses in the areas with more houses. It's called math.
  • where are the vacant homes located?
    The people on this forum who say failed Indiana policies are why people are moving away need to look at the areas with vacant homes. Urban, inner city democratic areas are where all the vacant homes are. How many vacant home do you suppose are in conservative areas like Hamilton and Johnson counties? not many. They are mostly in Indy, Muncie, Gary, Anderson, etc. Policies have failed these communities but its not the states conservative policies, its urban democratic policies
  • Too Bad
    Too bad that you weren't one of them that moved.....
  • Take your naysaying negativitiy somewhere else
    That's way too simple of an assumption. All states have been hurting since the recent great recession. However Indiana has been bouncing back like few other states. As mentioned a lot of these abandoned homes are beyond repair so they need to be knocked down.
  • Hmmm....
    It takes more than cutting taxes and legislating a "right to work" law to attract people to a stingy city and state with poor overall quality of life indicators.
  • Why oh why
    Why are there so many abandoned homes in Indiana. Because people are moving AWAY

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    1. The east side does have potential...and I have always thought Washington Scare should become an outlet mall. Anyone remember how popular Eastgate was? Well, Indy has no outlet malls, we have to go to Edinburgh for the deep discounts and I don't understand why. Jim is right. We need a few good eastsiders interested in actually making some noise and trying to change the commerce, culture and stereotypes of the East side. Irvington is very progressive and making great strides, why can't the far east side ride on their coat tails to make some changes?

    2. Boston.com has an article from 2010 where they talk about how Interactions moved to Massachusetts in the year prior. http://www.boston.com/business/technology/innoeco/2010/07/interactions_banks_63_million.html The article includes a link back to that Inside Indiana Business press release I linked to earlier, snarkily noting, "Guess this 2006 plan to create 200-plus new jobs in Indiana didn't exactly work out."

    3. I live on the east side and I have read all your comments. a local paper just did an article on Washington square mall with just as many comments and concerns. I am not sure if they are still around, but there was an east side coalition with good intentions to do good things on the east side. And there is a facebook post that called my eastside indy with many old members of the eastside who voice concerns about the east side of the city. We need to come together and not just complain and moan, but come up with actual concrete solutions, because what Dal said is very very true- the eastside could be a goldmine in the right hands. But if anyone is going damn, and change things, it is us eastside residents

    4. Please go back re-read your economics text book and the fine print on the February 2014 CBO report. A minimum wage increase has never resulted in a net job loss...

    5. The GOP at the Statehouse is more interested in PR to keep their majority, than using it to get anything good actually done. The State continues its downward spiral.

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