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Friday, May 09, 2008
Law - "Empty Homes Spur Cities' Suits: Banks, lenders sued to recover costs"
Julie Kay of The National Law Journal has an interesting article today that begins:
Homeowners aren't the only ones claiming they were victimized by the subprime foreclosure debacle sweeping the nation.Cities now dealing with scores of abandoned, foreclosed homes have started suing banks and mortgage companies to recoup their costs, while other cities are hauling lenders before code enforcement boards and county courts to force them to maintain abandoned properties.
The innovative legal tactics are designed to recoup the city's lost property taxes as well as the cost of fire departments, police, code enforcement or even demolition -- any city services needed to clean up or deal with the foreclosed properties.
Cleveland; Baltimore; Buffalo, N.Y.; and Minneapolis, Minn., have all filed lawsuits against lenders or developers based on the devastating effects foreclosures have wreaked on their communities. The lawsuits were filed in recent months under different theories, in state and federal court.
Cleveland and Buffalo filed suits under public nuisance laws. Minneapolis' suit was brought on consumer fraud grounds, while Baltimore took the unusual approach of filing suit in federal court under alleged Fair Housing Act violations.
In addition to filing a lawsuit in February, Buffalo city prosecutors routinely haul banking officials before the local housing court to force them to fix up foreclosed and abandoned properties.
Posted by Marcia Oddi on May 9, 2008 02:27 PM
Posted to Indiana Law