Law makes banks keep up foreclosed properties
September 2, 2011

By Amy Rothblatt

The unanimous passage by the City Council on July 28 of an ordinance introduced by 3rd Ward Alderman Pat Dowell will shift the responsibility for maintaining foreclosed properties from the City to the banks, mortgage lenders, and other institutions holding the properties.

Dowell said she considers this a “landmark piece of legislation” and feels that it will not only save the City millions of dollars but help keep the many neighborhoods that have significant numbers of foreclosures from declining further, preventing the properties from “being an eyesore in the neighborhood and reducing property values,” she said.

“In 2010, the City spent over $15 million in general upkeep, board-ups, and demolitions of buildings,” Dowell noted. The Department of Buildings tore down or boarded up more than 500 buildings at a cost of $13.7 million, and the Department of Streets and Sanitation performed general upkeep on 1,963 vacant properties and demolished 345 vacant garages at a cost of $1.8 million. Nearly all these buildings and garages fall into the category addressed by this ordinance.

Mayor Rahm Emanuel, who supported Dowell’s proposal and signed it into law, said the ordinance “will move towards making sure that Chicago’s taxpayers do not incur the cost of maintaining vacant properties.”

Dowell lobbied hard to gain support for the ordinance from the mayor, other City officials, and community groups. In particular, she noted that Action Now, a local organization committed to helping families and fostering commu-nity change, actively addresses issues surrounding foreclosed and vacant properties and strongly advocated passing the ordinance.

“The ordinance resonated with many of my colleagues who are struggling with vacant properties in their communities,” Dowell said. She feels earlier City statutes contained ambiguous language defining the “owner” of a property, allowing mortgage holders to shift responsibility for upkeep to the City.

As part of the new ordinance, the definition of a property’s owner has changed to “an entity” that “holds a mortgage on a property.”

“The banks did not see themselves as owners, and they had no commitment to maintaining these vacant properties,” Dowell explained. “These are abandoned properties, and they have an impact on the city’s neighborhoods if they’re not properly maintained. This includes garbage removal, shoveling of snow, maintaining the grass, board-up, etc. And when vacant buildings are left to deteriorate, local property values tumble, and criminality gains an entry into the neighborhood.”

Emanuel said that, when a property forecloses, “every other house on the block immediately loses $7,000 in value.” He echoed Dowell’s sentiments that safety and crime prevention also are major factors requiring mortgage holders to provide care, maintenance, and supervision of these properties. “Empty and blighted properties become crime magnets and, potentially, lead to the feeling that the neighborhood is rapidly declining,” Emanuel added. Braden Listmann, housing policy director of Action Now, said “The ordinance is important because what’s been going on is banks file a foreclosure action, and in Cook County it can take a year to be resolved. In the meantime, the owners leave and the house is open to criminals stripping it of its pipes, furnace, and other items, and squatters may move in and sell drugs. The property was in limbo, with nobody responsible for the upkeep.

“The reason we made it a priority is because many of our members were living near vacant, in-limbo properties in distress. They would call 311, but the owner of the property was long gone. Now the City can make the mortgage holder keep the property up,” Listmann said. “There was opposition from the banking industry, but the positive effect of this ordinance is that the banks are now more willing to have a dialogue with the City, the aldermen, and community groups about the buildings that they own in the city.” Dowell said. The ordinance requires the owner of any vacant building to file registration of ownership within 30 days with the Department of Buildings. Registration is valid for six months; it must be renewed every six months that the building is in foreclosure.

“The Department of Buildings will be required to enforce this,” Dowell said. “I think the ordinance will take effect some time in September.”

Alderman Robert Fioretti (2nd Ward) was a cosponsor of the legislation. For additional information, contact Dowell at 5046 S. State St., (773) 373-9273, or Dowell also provides a monthly newsletter that can be accessed at

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