Banks and financial institutions that file foreclosure actions against properties must maintain the properties if they have been abandoned by their owners, under a new ordinance adopted by the Common Council.
“This is a very important piece of legislation,” said Ald. Michael Murphy, who sponsored it with Aldermen Jim Bohl, Robert Bauman and Willie Wade. Murphy said the ordinance is being eyed as a nationwide model.
Under the legislation, lenders must inspect a property once a foreclosure action is filed and register the property if it appears to be abandoned. Lenders must reinspect occupied properties every 30 days.
The ordinance also requires lenders to assure that:
• Buildings are secured and inaccessible to unauthorized persons.
• Litter, trash, debris and graffiti are removed.
• Grass is mowed, noxious weeds are removed, vegetation trimmed.
• Immediate risks to health, welfare and safety are eliminated.
• Public walkways are kept free from ice, snow, mud and other debris.
Violations can bring fines of $100 to $2,000.
Many banks and lenders support the ordinance, which was modified in draft form after lending institutions objected to some of its original provisions, according to testimony before the Common Council’s Zoning, Neighborhoods and Development Committee.
The city has 1,700 foreclosed properties, with another 4,500 “on the waiting list,” Murphy told the council.
In some instances, owners who can’t make their mortgage payments are simply walking away from the properties, he said.
As a result, “the snow is not shoveled on the sidewalks, the grass is not cut, the garbage is not picked up, these properties end up becoming attractive nuisances, they become problems with gang members, solicitation. They also become fire traps, they also provide further decline in property tax values of the properties adjacent to them.”
The new ordinance, he said, is “not a silver bullet in terms of addressing all of these issues.”
The ordinance gives the city one way to deal with an issue made more difficult by the securitization and sale of loans between institutions. Murphy singled out Deutsche Bank, based in Germany. Deutsche has more than 400 city properties that have been foreclosed upon and 14 servicing agents.
“None of them can be reached,” he said.
The ordinance, he said, “is not a panacea, but I think it’s the right direction.”