Providence Mayor Curbs Rise in Foreclosed Houses for Sale
Homeowners in Providence who have been struggling to save their houses from becoming foreclosed houses for sale will be helped by two city ordinances signed by the mayor to protect homeowners and renters across the city from unfair dealings.
Mayor David Cicilline has signed an ordinance that would require mortgage banks to undergo mediation with homeowners and work out ways so they can save their homes. The other ordinance signed by the mayor aimed to protect tenants staying in homes foreclosed by banks.
Since the start of 2008, over 2,000 houses in Providence have been foreclosed and taken back by their lenders. City officials reported that most of the people affected by foreclosures were renters.
Mayor Cicilline said the impact of foreclosure has been devastating to the city. Foreclosures have lowered property values, cut down tax revenues and increased crimes in areas with lots of abandoned and foreclosed properties.
Under the ordinance to protect renters, lenders foreclosing on a rental property are required to continue paying for essential utility services such as heat and water. They also must allow the current tenants to stay in the foreclosed property until their lease expires. Additionally, the lenders should notify renters of the foreclosure and provide them with the name of the new owner of the foreclosed home so they can pay their rent and not violate any lease contract provision.
The foreclosure prevention ordinance was patterned partly after the program of Philadelphia. The city would reject property transfer deeds from lenders who foreclosed homes without undergoing mediation with distressed homeowners. The transfer of ownership of a real estate property would be recognized only if a deed of transfer has been filed with the city.
The mayor said that city officials were still ironing out the details of the mediation plan, but the quasi-public agency Rhode Island Housing has already committed to provide foreclosure prevention counselors to work out repayment agreements with the lenders. He said estimates of the costs of mediation and administration of the rental protection program were not yet completed, but he said the cost of doing nothing is greater.
Cognizant of the possibility that mortgage lenders will launch a legal challenge to the two ordinances, the mayor has already approached lenders and talked with them about the ordinances.
According to housing advocates in the area, including council member Kevin Jackson, they will also push for similar ordinances in other cities in Rhode Island.
