Bill would shield banks from cost of maintaining homes in foreclosure

Article Courtesy of The Sun Sentinel
By Jennifer Gollan
Published April 27, 2009

Some taxpayers already cover maintenance expenses
Coconut Creek last year spent about $70,000 to maintain and then demolish a derelict foreclosed home in the South Creek neighborhood.

For more than 18 months, city workers mowed the lawn, fixed fences and warded off mosquitoes with repellent.

Finally, they gave up and just razed it.

Across the state, local governments are grappling with a flood of such distressed properties. While many in Broward County Click here for restaurant inspection reports bill banks for tidying neglected properties, a few cities such as Coconut Creek and Lighthouse Point absorb some costs. Lauderdale-by-the-Sea has persuaded lenders to maintain about a dozen homes.

But their options could be limited if an initiative being pushed by the Florida Bankers Association is passed by the Legislature. It would bar governments from requiring banks to maintain properties in foreclosure until the bank has acquired the title to the land, a process that can take six months or more. It also would prevent cities from tracking such homes.

Local municipal officials say the measure would burden responsible homeowners with more taxes. They fret that legions of properties will fall into decline, dragging down property values.

"This legislation is shifting the bill to the public to take care of this problem," said Gus Zambrano, Miramar's economic development and revitalization director. "It is very surprising that the banking industry is looking for additional support from taxpayers, given all the bailouts and the fact that they are now reporting profits."

Anthony DiMarco, the head lobbyist for the Florida Bankers Association, countered that local governments should bear the responsibility.

"Until we take the title to the property, we don't have any right to go on the property to maintain it," DiMarco said. "The local governments are the caretakers of the community."

Coral Springs has spent $48,411 — money it hopes to recoup through property liens — to fix up about 70 properties since Oct. 1. Money is spent on "whatever is needed to protect the property," said Larry Staneart, the city's development services director.

"It's a safety issue; an abandoned home will attract anything from pests to vandals," Staneart said. "The other part of that is unkept properties are an eyesore and can lower property values around it."

Lighthouse Point spends $2,000 a month to clean pools or mow lawns at 20 properties. Pompano Beach is paying to clean some pools, though officials hope federal grants will cover the cost.

Braulio Rosa, a spokesman for Davie, said banks must take responsibility.

"Public dollars shouldn't be going to maintaining private property," Rosa said.

With municipal budget deficits growing, some local officials are mobilizing to thwart the measure.

Sunrise Mayor Roger Wishner worries such legislation will force local governments to raise fees and taxes "that will ultimately push people out of their homes."

Rose, the development services director for Coconut Creek, agreed: "If we have to maintain the properties, it will come from tax dollars."

Homeowners associations also hope to quash the proposal.

Gary Poliakoff, a director of the Community Association Leadership Lobby representing almost 4,500 homeowner associations in Florida, has urged members to write their legislators. It behooves banks to maintain properties to sustain their value, which helps them maximize the return on their investment, he said.

"Banks created the problem in the first instance by relaxing lending requirements and placing individuals who are not creditworthy in communities," Poliakoff said. "Banks don't want to pay their share of maintenance fees, which are going largely to maintain the collateral that secured their loans, until they find buyers for defaulted properties."