Rethinking Foreclosure Laws In Baltimore

February 18th, 2008

Witnessing a major hike in foreclosures, Baltimore City Council feels that lenders should maintain foreclosed, vacant properties which are fast becoming dilapidated. Since the transfer of title is not done till the property is resold, the name of the owner is most often unknown, according to Robert Curran, Councilman, D – District 3. He also sponsored a bill that was introduced at a meeting at the City Council. This would require a notification to the Department of Public Works by all the lenders within a time period of 30 days after the foreclosure of a property.

Within 45 days, the contact details of the lenders would be recorded in a database which the city would maintain. Here, the lender would be listed as the property owner and the title does not necessarily have to be transferred. Because most banks fail to transfer titles after they acquire a home, in cases where the house is not being maintained properly, the housing department invariably brings to book the earlier owner who has already faced foreclosure.

In Curran’s 3^rd District, the problem of too many foreclosures is made worse by the ill maintenance of the foreclosed properties. A recent survey has shown a 793 percent increase in the rate of mortgage arrears as compared to 2006. Preliminary estimates show that the city is losing millions in the form of lost tax revenues due to the dip in the real estate market. The revenue received from recordation and transfer taxes constituted a major part of the city’s surpluses when there was a boom in the real estate market. The budget analysts predict at this point, while the financial year is halfway through, that this time there will be a shortfall of $20-$30 million in receipts.

The city hopes that the new bill will be able to control the authority of the banks and the lenders. A lawsuit has been filed against a practice known as ‘reverse redlining’, where mortgage lender Wells Fargo offered high-priced loans primarily to minority homeowners. City attorneys feel, that for this reason, Wells Fargo Mortgages face four times more foreclosures in a primarily black area as compared to a predominantly white neighbourhood. More accountability would be required from the lenders and they may face more lawsuits. Curran declared that the annual registration fee of $25 would be waived for owners who have vacant plots as they were already paying property taxes at a quite high rate.