Activists Oppose Changes To Foreclosure Ordinance
The city of Springfield Massachusetts is considering changing a local ordinance that was hailed as a national model for addressing problems caused by foreclosures. Community activists, who championed the ordinance when it passed almost two years ago, accuse city officials of caving into the banks.
To settle a federal lawsuit filed by several banks, the Springfield City Council is being asked to exempt banks from a requirement to post a $10,000 bond on each foreclosed property, if other conditions are met. The bond was to cover the city’s costs for securing and cleaning up houses that are left vacant and abandoned as a result of foreclosures.
Under the proposed amendment to the ordinance that was passed unanimously in August 2011, banks would be exempt from the requirement to post the bond by registering the foreclosed property with the city, paying a $100 administrative fee, and identifying both a local agent and a local property manager. A mandatory mediation program to help homeowners facing foreclosure would be left intact.
City Councilor Kenneth Shea believes the settlement is in the best interests of the city
Shea said the requirement to post a $10,000 bond penalizes small local banks that have not abandoned foreclosed houses after the property is left vacant.
But City Councilor John Lysak said small local banks are a very small part of the foreclosure problem in Springfield.
Former Springfield City Councilor Amaad Rivera, who was the lead sponsor of the ordinance, said the proposed changes amount to a loophole for the banks and will defeat the goal of eradicating the blight caused by foreclosures.
Rivera notes the ordinance was upheld last July by U.S. District Court Judge Michael Ponsor, who in a strongly worded ruling held it did not violate federal and state laws, as the banks contended. The banks appealed Ponsor’s decision and mediation resulted in the proposed settlement.
As part of a national housing crisis exacerbated by the great recession,Springfield, for several years now, has had among the highest number of foreclosures in the state. The consequences are visible in many neighborhoods, according to Malcolm Chu of Springfield No One Leaves, an organization that protests foreclosure auctions and evictions.
As a result of its high foreclosure rates, Springfield has been eligible to receive millions of dollars in neighborhood stabilization assistance from the U.S. Department of Housing and Urban Development. This has allowed the city and housing agencies to buy up some foreclosed homes, make repairs and put the property back on the market.