Banks want off the hook for upkeep on foreclosures

OrlandoSentinel.com

Banks want off the hook for upkeep on foreclosures

Local governments say move by Florida bankers group would stick taxpayers with the tab for keeping foreclosed homes from deteriorating and dragging down neighboring property values.

by Jason Garcia | Sentinel Staff Writer

April 22, 2009 / TALLAHASSEE

With tens of thousands of homes across Florida left abandoned and overgrown by the foreclosure crisis, governments from Miami to Winter Garden have responded by sending crews out to mow lawns, clean pools and do other basic work -- leaving behind bills for the banks to pay once they take possession of the property.

The state's banking industry wants to put a stop to the practice.

Banking lobbyists have quietly crafted a measure in the Florida Legislature that would prevent cities and counties from forcing the banks that hold mortgages on properties in foreclosure to maintain those properties until they have actually acquired the title to the land -- a process that can take six months or more to complete. The language, written by the Florida Bankers Association, would also prevent cities from establishing registries to keep track of all the foreclosed homes in their area.

Industry lobbyists hope to tack their language on to other legislation in the waning days of this year's legislative session, which is scheduled to end in a little more than a week. "It's a big issue," said Anthony DiMarco, a lobbyist with the bankers association, whose members include Bank of America, SunTrust, Wachovia and many others.

Local ordinances aimed at making banks maintain foreclosed properties -- typically by allowing cities to impose liens or other charges on the land -- "sound great," DiMarco said, "but until we take title, we're not supposed to do anything with the property -- we don't own the property."

But the industry group's maneuvering has sparked an uproar among cities and counties that say abandoned homes and businesses must be maintained to ensure they don't drag down surrounding communities. They accuse the banks, already decimated by losses from bad home loans, of trying to pass off those maintenance expenses to taxpayers.

"We've got a lot of people thanking us for going in and cleaning up the lots, cleaning up the pools, getting the house halfway decent so you don't live next to a health hazard," said Gary Bruhn, the mayor of Windermere, which has passed a law allowing city officials to place assessments on the tax bills of the homes whose lawns it has to mow.

"We, as homeowners, should not be subsidizing these homes," Bruhn said. "The bottom line is they [the banks] are the ones who have to be held accountable. Because they are the ones that are going to own the property."

Statewide, about 15 cities and counties have passed ordinances specifically aimed at maintaining foreclosed or abandoned properties, including Orlando, Windermere and Winder Garden, said Desinda Carper, a lobbyist with the Florida League of Cities. But many more are using existing code-enforcement regulations to confront the issue and they, too, would be affected by the banks' proposal.

The problem of blighted homes is two-fold: An overgrown, unkempt house is an eyesore that can lower the property values of all the homes surrounding it. But it can also become a safety issue by attracting everything from pest infestations to vandals.

"We've received reports where there have been squatters that have actually moved into abandoned properties, as well as one case where there was a dog-fighting ring who were keeping their pit bulls in an abandoned property," Carper said.

Maintaining those properties -- mowing lawns, draining pools, boarding up broken windows -- is expensive, particularly during the summer, when grass must cut as often as every two weeks. Carper said it can cost a city between $6,000 and $12,000 per property. "And that's bare minimum," she said.

DiMarco, of the Florida Bankers Association, said his group agrees that banks should be responsible for maintaining foreclosed properties -- but only once they actually own them. "Once we take title, we should take care of it," he said.

The problem is courts are so clogged with foreclosure cases that it currently takes months before one is fully processed. That leaves the property's ownership in limbo.

"No matter what the banking industry may feel, they are still responsible for the property. Because the bank is actually being given back its property," said Carper, the League of Cities lobbyist.

DiMarco said the bankers group isn't sure to which legislation, if any, it will try to get its language attached. But there are various growth-management, housing and related bills in play this spring that could become vehicles for the association's language before the session ends May 1.

Another option if no legislation is passed: DiMarco said the bankers association is considering challenging a local foreclosure ordinance in court. Jason Garcia can be reached at jrgarcia@orlandosentinel.com or 407-420-5414.