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Law Center flooded by foreclosure calls

The Western New York Law Center has been inundated since news broke of $11.6 million in surplus auction money that foreclosed owners can claim, but the city never told them about.

Hundreds of calls poured into the nonprofit after a Nov. 26 Buffalo News story revealed the staggering balance from Buffalo’s property auctions, from 2009 to 2014, in an account managed by Erie County Comptroller Stefan I. Mychajliw Jr. The average amount is $9,600; the highest is almost $150,000.

But the law doesn’t require the city to give surplus notifications, and after five years the money goes into the state’s general fund. Only 11 percent, or $2.56 million, has been claimed for the sale of 153 properties out of 1,368 with surpluses since 2009.

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SEARCHABLE DATABASE: Buffalo property auction surpluses, 2009-14

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Now that the word is out, more previous owners are coming forth, anxious to claim the money. But it’s an involved legal process since some properties might have lienholders and judgments, and those creditors have first dibs on the surplus. A State Supreme Court judge decides its rightful owner.

The law center’s assistance is free, so city residents, like Yvonne Young, have been calling.

“I’ve been assigned a lawyer, and I’m so excited to get the process started,” said Young, who is expecting the entire $64,535 left from the sale of her West Side home in 2012 since a title search yielded no lienholders or judgment creditors. “I can’t believe it and won’t believe it until I have the money.”

The law center’s surplus case load grew tenfold from last year’s in just two weeks. A new surplus hotline had to be created to handle the calls.

As of Monday, 31 cases had been validated using the Buffalo News property auction surplus database and 39 more are being processed as the phone continues to ring.

“It’s really picked up; we’ve definitely been busy,” said Paulette Cooke, a staff attorney at the law center.

Writing new laws

The revelation of the money also galvanized lawmakers at different levels of government to amend, adopt or propose legislation to quickly address the problem.

“I’m really glad,” said Joseph Kelemen, attorney and executive director of the law center, about the changes. “It’s good for the previous owners and the city because this is money that will stay in Buffalo and be circulated in the local economy.”

Buffalo’s Common Council passed a resolution to notify property owners in writing starting next year. Erie County, which also been quiet about $1.43 million in surplus funds from outside the city, is looking to make similar changes. State lawmakers changed a proposed legislation’s main scope, originally aimed at letting the city keep the excess proceeds, to requiring it to incorporate a comprehensive notification process into its foreclosure proceedings.

Former sales

But the swift changes don’t address the 1,210 properties, not including the county’s 76 in the suburbs, already foreclosed upon that account for the $11.6 million in unclaimed money. The increase in the law center’s cases is barely putting a dent in the list, which does not include names of past owners, only the addresses of properties sold and their surplus amounts.

“What about the people who lost their homes years ago? How are they supposed to know,” asked Colleen Parker, a 57-year-old Buffalo resident, whose home was sold in the 2014 auction but learned of the $92,742 surplus from The Buffalo News. “Not everyone reads the paper or watches the news. How will they know?”

April Reynolds, a 45-year-old Buffalo resident, didn’t know until Thursday that $13,149 remains from the 2012 sale of her house.

“A surplus? I haven’t heard anything about this,” Reynolds said. “All I can say right now is wow.”

The law center is launching an outreach campaign next month that will probably employ investigative online tools to find the previous owners or their heirs since their current addresses are unknown. Assemblyman Michael Kearns, D-Buffalo, is drafting legislation, with the center’s assistance, to require notifications be retroactive to 2009. It calls for “extraordinary efforts” to find and unite owners with the money but also allows municipalities to charge surplus accounts “reasonable fees” to cover notification costs, he said.

Erie County Legislator Barbara Miller-Williams also proposed Thursday that the county comptroller and director of real property and tax services appear before the Finance and Management Committee to explain how they intend to identify and return money to former homeowners to whom surplus funds are due.

She said she was “appalled” to read that no one was making an effort to find them.

“I was shocked, just as many folks were,” Miller-Williams said. “My goal is to get money back to the citizens first.”

Meanwhile, local private law firms are on a separate and profitable pursuit to also find surplus claimants.

“They’ve got the list too and have been calling me to find out how to file the claims,” Cooke said. The comptroller’s office has also received a number of requests for the list from law offices.

“They think it’s a gold mine, and plan to track down previous owners,” Cooke said, “but some charge 30 percent of the surplus money.”

Claimants can to take their cases to a private firm, but the law center’s services are free, Cooke added. The center’s surplus hotline is 855-0203, Ext. 124.

News Reporter Sandra Tan contributed to this report. email: esapong@buffnews.com