Ordinances should help foreclosure problem
Date: 7/26/2011
July 27, 2011By G. Michael Dobbs
Managing Editor
SPRINGFIELD Two ordinances passed by the City Council on July 18 were seen as victories in the effort to control the number of foreclosures in the city.
One ordinance requires that foreclosing banks pay a $10,000 cash bond to assist the city in securing and maintaining the property. The second ordinance compels the foreclosing institution to enter into a good faith mediation with a homeowner before foreclosing. The enforcement mechanism for the second ordinance has yet to be determined.
City Councilor Amaad Rivera introduced the two ordinances.
In anticipation of the City Council vote, on July 12 members of the advocacy group Springfield No One Leaves/Nadie Se Mude Coalition conducted a tour of several houses that illustrate the problems facing the city’s housing market.
The house at 278-280 Commonwealth Ave. illustrates the issues confronting neighborhoods. According to Malcolm Chu of the group, the home was sold in 2005 for $200,000. The home was foreclosed in April and was listed for sale for $55,000, which represents a decrease in value of almost 75 percent.
There is no “for sale” sign on the boarded up home and it has attracted crime to the neighborhood, according to Chu.
A vacant foreclosed home can cost the city between $5,000 and $19,000 in maintenance, Chu said. If there is a fire on the premises, that cost could be as much as $34,000.
He said one of the problems is that banks are difficult to track down. Deutsche Bank owns the home at 278-280 Commonwealth Ave.
Banks also seem more willing to allow a property to stay vacant and vulnerable than to rent them out to families or to work with the owners of the house, Chu explained. He speculated that banks hold on to the properties that were bought with inflated market rates in the hopes those values would return.
“Why aren’t banks willing to sell at the current market rates?” Chu asked.
Springfield No One Leaves/Nadie Se Mude Coalition has been tracking foreclosures in the city and Chu said there are between 250 and 300 bank-owned houses with 190 of them vacant through foreclosure.
The recent tornado has only made the housing situation worse in the city, he added.
Rivera told
Reminder Publications that the banks left their problems for the city. The two ordinances are ways in which the city can help protect its housing values.