Thursday, January 01, 2009

Large Banks Ignoring Foreclosed Properties

Below, Griff notes the Enquirer's growing tendency to shift local news coverage from its newspaper (both print and online editions) to its blog. Symptomatic of that tendency is this post on the Politics Extra Blog by Jane Pendergrast, which reports that last week, the City of Cincinnati filed suit against Deutsche Bank and Wells Fargo for failing to properly maintain properties upon which they have foreclosed.

The conduct of banks that have foreclosed on properties is a real problem in Cincinnati. The banks just let the property sit until they can find someone to buy the property. Generally, banks entirely ignore Cincinnati ordinances, including requirements to properly maintain the structures and to obtain vacant building maintenance licenses. In its 22-page verified complaint, the City does an excellent job describing the situation and the reason it filed suit:

This is an action by the City of Cincinnati against two lenders that
regularly appear in Hamilton County Courts to prosecute foreclosure actions but have consistently refused to appear when summoned by the City of Cincinnati for the basic maintenance of abandoned and vacated properties titled in the names of Defendants. The City of Cincinnati seeks to hold these entities accountable in the same manner that individual property owners are held accountable for abandoned and vacated properties and seeks injunctive relief, declaratory relief, and money damages. Over the past three years, the City of Cincinnati and its departments have made several attempts to communicate with Defendants regarding the numerous properties and buildings throughout the City that were and are in violation of City health and housing codes. Defendants have consistently failed to take responsibility for the maintenance and upkeep of such properties; in fact, Defendants have gone so far as to deny ownership of these properties.

Defendants have consistently refused service of process and ignored summonses pertaining to criminal complaints filed by the Property Maintenance Division . . . as well as notices sent . . . regarding civil fines for failure to comply with the Cincinnati Municipal Code.

(Verified Complaint, paras. 1 & 16.) As Pendergrast notes, the defendants have removed the case to federal court, where it is now pending before Chief Judge Beckwith. Part of what the City sought in Common Pleas court was an injunction preventing the banks from transferring the property (the City claims they have a history of transferring nuisance properties once legal action is filed in order to avoid liability). While the defendants claim they have already divested themselves of some of the property at issue in the new suit, they and the City have agreed that no further transfers (of property named in the litigation) until the case is concluded or the federal court orders otherwise.

The City, joined by the County (which is also named as a defendant, in that it has an interest in the properties as holder of various tax liens against them) has asked Judge Beckwith to remand the case back to state court. The banks have been ordered to file their response by January 22. Given the surge of foreclosures in Hamilton County, this is an extremely important issue--and one that merited more attention from the Enquirer than relegation to its blog.

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