Mayor Byron Brown, in an effort to send a strong message to lending institutions and possibly regain some of the money the city has spent taking care of properties the banks have in foreclosure, has filed suit against some 40 banks and lending institutions.
According to an Anti-Flipping Task Force document, Chase Manhattan, CitiFinancial, Deutsche Bank, M&T, JP Morgan, Keybank National, Wells Fargo and Washington Mutual are among the institutions targeted by the suit.
"The banks initiate a foreclosure procedure, the property becomes vacant, and then the banks don't want to incur the additional indebtedness of maintaining the properties and keeping them within code," Mayor Brown said.
"The houses are then boarded up at the city's expense," Brown continued. "If foreclosure isn't completed, the expense falls to the city when the residents of the neighborhood want action. This has resulted in the expenditure of upwards of $2 million in the last few years alone."
The need to demolish these homes creates more problems for the city and the neighborhoods, but according to the mayor, the financial liability belongs to the lenders. Therefore, based on nearly 60 properties, the city has filed suit to make the banks accountable.
"We are saying to the banks that when you do this, you create an impact on the neighborhood and create cost for our city at a major expense," Brown said. The message is that this is harmful, costly, and that the dollars the city has expended must be recouped."
As to what he would suggest to the lenders for the future, Brown said, "Work with people. Don't initiate foreclosures until you can start it, complete it and either maintain or resell the properties."