Just this week, it was announced that Chicago City Council voted on a local statute that makes lenders liable for vacant properties, even when they don't have title. Granted, Chicago has a major issue with vacant properties in blighted neighborhoods and they are making efforts to address this. The quantity of bank-owned, foreclosed, and abandoned properties in Chicago is not a pretty sight. Yet, making a lender liable for a vacant property that they don't even have ownership in seems like a well-intended action that will likley be overturned if and/or when appealed in court. The new statute applies to homes before they are foreclosed, which means lenders now are required to maintain the property if the homeowner abandons it. Yet the bank may still be trying to collect payments due, devise a resolution for the delinquency, or waiting on the local courts to complete the foreclosure. Seem awfully suspect.
Tom Deutsch, executive director of the American Securitization Forum, says while well-intentioned, the legislation is “misguided and contrary to established property law nationwide.” Given that Chicago spent more than $15,000,000 to deal with vacant buildings, it is no surprise that Mayor Rahm Emanuel’s office was willing to provide some perspective, saying vacant homes have become a financial burden on the city of Chicago.
Michael Hobbs, President, PahRoo Appraisal & Consultancy
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