The 1,300-square-foot home has sat largely vacant since falling into foreclosure more than two years ago, racking up $55,372 in code violations while the case lingers in court. A tattered sign out front informs visitors that BAC Field Services, a subsidiary of the megabank, “intends to protect this property from deterioration.”
“They’re doing a great job,” Minkel said sarcastically.
This slice of central Florida has been battered by the foreclosure crisis. But thousands of abandoned and vacant properties, many in legal limbo, are plaguing neighborhoods across the country. The result has weighed down already falling home values, attracted crime and vagrancy, and forced cash-strapped municipalities to tap dwindling budgets to care for decaying houses.
With more foreclosures looming, some state and local officials are pushing the financial industry to do more to repair the damage on Main Street, which is still reeling from high unemployment and a housing crisis that has hampered the national economic recovery.
In Los Angeles, officials are suing Deutsche Bank, calling it the city’s biggest slumlord. In Illinois, some legislators have pushed for a bill that would allow cities to enforce ordinances on vacant properties against banks that are foreclosing on homes, even if they haven’t taken ownership.
In Maryland, a lawmaker from hard-hit Prince George’s County wants banks and lenders to face stiff fines for failing to maintain properties to local standards. Hundreds of cities have passed or are considering ordinances requiring firms to register vacant properties so officials know whom to pursue when homes fall into disrepair.
“I’m seeing almost every week another community doing something to go after these properties,” said Frank S. Alexander, a law professor at Emory University who has advised municipalities on how to face off with banks. “The local governments are realizing that they are the ones that are getting stuck with all the cost. It’s killing them.”
A central problem is one of assigning responsibility. In many cases, homeowners vanish before the bank that initiated the foreclosure completes the process and legally takes ownership. That leaves local officials to either pursue absent borrowers with no ability to pay or to wrestle with banks that have limited authority to maintain the property.
Even when firms do seize a property, the complex system that fueled the housing boom can cause confusion during the bust. Millions of mortgages were pooled into massive securities that were then sold to investors and managed by trusts. In turn, mortgage servicers were hired to collect the mortgage payments and foreclose on behalf of investors when loans went bad. That structure has made it difficult and time-consuming for authorities to determine whom to pursue.