Banks Will Have To Post Bond With Foreclosures To Secure And Maintain Properties
Authorities in Springfield, Massachusetts announced Monday they will begin enforcing anti-foreclosure regulations that survived a federal court challenge. An activist who had lobbied for passage of the new requirements more than two years ago lamented the slow pace of implementation.
Owners of vacant houses and banks in the process of foreclosing on homes will be required to register the property with the city’s Office of Housing, post a $10,000 bond, and name a local manager to be responsible for the building. Springfield Mayor Domenic Sarno said the regulations will remove a burden from city taxpayers, help rid blight from neighborhoods and enhance public safety.
The $10,000 bond that must be posted for each foreclosure is intended to cover the cost of securing and maintaining properties that are abandoned—an expense that until now had fallen to city taxpayers. The requirement for a local property manager will help tenants who find themselves living in a bank-owned building with no one to call if the heat should go off or the building needs repairs.
Shortly after the Springfield City Council voted unanimously for a set of anti-foreclosure ordinances in August 2011 the Massachusetts Bankers Association along with a half-dozen local banks filed a lawsuit in federal court. In July 2012, U.S. District Court Judge Michael Ponsor ruled in favor of the city. His decision has been appealed, and oral arguments in the case are scheduled for next month before the U.S. Court of Appeals in Boston.
The city council also voted to require banks to participate in a mediation process with people facing foreclosure. Sarno said that will be implemented later.
Sarno estimated it will cost $750,000 to implement the anti-foreclosure regulations.
At the time the city council was debating the ordinances in 2011 it was estimated there were more than 300 bank- owned houses in Springfield with two-thirds of the properties vacant. Springfield Code Enforcement Commissioner Steven Deslilets said the city will now have the money to board up and clean up abandoned houses.
Springfield Police Commissioner William Fitchet said foreclosed and abandoned houses pose a serious public safety issue.
Springfield Fire Commissioner Joseph Conant said fires occurred in 37 vacant houses in the last two years.
Malcolm Chu, a community organizer with Springfield No One Leaves, who lobbied for passage of the anti-foreclosure regulations, said it is hard to comprehend why it has taken so long to implement the cutting edge laws.
Chu said it is frustrating to see other municipalities adopt and implement bonding and mediation requirements in foreclosure proceedings that were modeled after the Springfield ordinances, while Springfield has lagged behind in enforcing its rules.