The Chicago City Council is becoming one in a line of local governments to consider legislation to hold lenders more responsible for properties they have foreclosed upon. If passed, Chicago’s ordinance would lay responsibility for securing and maintaining vacant buildings on lenders, whether or not they have actually claimed legal possession. It would also require lenders to post a bond of $10,000 on every vacant building they foreclose upon and provide a finder’s fee of 5 percent of the total fines and fees assessed (usually between $50 and $250) to neighbors who report maintenance violations on vacant properties.
Other legislation designed to hold banks responsible includes New Jersey’s Senate Bill 2777, which holds the lender responsible for code violations as if they were the owner if a property goes vacant at any time after filing a foreclosure. In Cleveland and its inner-ring suburbs, banks and REO investors are being prosecuted for violations of criminal housing codes on foreclosed properties.