Tuesday October 16, 2012
Banks, financial institutions must register
with city when launching a foreclosure
Louisville leaders today announced the creation of a new registry that would require financial institutions to alert Metro Government when they foreclose on a home — and provide the name of a person who will maintain the properties if it becomes vacant.
The Foreclosed and Vacant Properties Registry was announced today by Mayor Greg Fischer and Metro Councilmember Rick Blackwell, who is the lead sponsor on the new city ordinance which will be introduced at council next week.
The new law will require financial institutions to register properties with the Department of Codes and Regulations upon filing a foreclosure action with the court.
This registration must include the address of the foreclosed property and a person the city can contact when there are issues -- when the grass is overgrown, windows are broken, etc. Institutions who fail to register their properties will be fined $100.
“Metro Government often ends up having to care for these vacant properties — cutting the grass, boarding the windows and responding to reports of vandalism — because banks often don’t keep the property in good condition,” Fischer said. “This new registry will help us create a database of all properties in foreclosure while also holding banks and financial companies responsible for maintenance.”
In the past 10 years, the city has spent $12 million caring for such properties — last year alone, Metro Government spent $1.8 million.
“In fact, all 750,000 citizens end up paying for that upkeep,” Fischer said.
Councilman Blackwell worked with members of the Jefferson County Legislative Delegation in making significant changes to state law that enabled Metro Government to recover some of the expenses related to maintaining abandoned property. He joined Rep. Joni Jenkins and others to see that a bill passed in the 2011 Kentucky General Assembly. The bill gave city government a higher priority in recovering taxes and fees than it had been previously during the foreclosure process.
“With the new law, we are already recovering some of the money we spend caring for foreclosed homes,” Fischer said.
Blackwell said the city is taking the right steps.
“There is no simple solution to this problem,” Blackwell said. “However, this registry of vacant properties, along with previous efforts at the state and local level, give us more tools to deal with the problem in a more timely manner.”
Fischer said the new registry is not meant to punish banks or financial institutions, rather it’s designed to ensure that the properties are maintained, which protects the bank’s assets while protecting the neighborhood. About 500 other cities have similar ordinances.
The effort is the latest in a series of actions taken in the past 18 months to help the city deal with the growing problem of vacant properties – there are an estimated 6,000 to 7,000 in Louisville and, of those, about 1,300 are abandoned.
The Mayor’s Innovation Delivery Team, funded by Bloomberg Philanthropies, has a team working to reduce the number of abandoned properties in Louisville by 40 percent (504 properties) in the next three years and 67 percent (844 properties) in five years. Reaching those goals includes a variety of efforts, from forcing vacant and abandoned homes into foreclosure and then getting them into the hands of new owners to targeted demolition of the worst properties.