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Who maintains foreclosures?

EDITORIAL | Opinion

THIS STORY APPEARED IN

January 03, 2012|By Paul McMorrow

Last summer, the city reportedly fined Wells Fargo bank for code violations… (Pat Greenhouse/Globe Staff )

FANNIE MAE and Freddie Mac have taken too much criticism for inflating the housing bubble, something they did not do. While the nationalized mortgage giants have been browbeaten over crimes they didn’t commit, they’ve somehow managed to skate away from the real scandal — the way the companies have acted in the aftermath of the housing crash.

The two companies have resisted efforts to staunch the flow of foreclosures and turn the country’s hobbled housing market around. Now, they’re in court, waging an absurd fight against the notion that they should have to maintain the homes they seize.

The case, which pits Fannie and Freddie against the city of Chicago, reeks of political gamesmanship. Even so, the lawsuit threatens to upend efforts to stabilize foreclosure-ravaged neighborhoods across the country. Boston was an early pioneer of the type of municipal foreclosure intervention that’s now on trial in Chicago. Now its efforts are being endangered by a Beltway spitting match.

In 2008, Boston City Hall was inundated with calls from residents living near abandoned, dilapidated properties. “At meeting after meeting, we heard about homes that appeared to be vacant, kids were going in and out, people were stealing copper, nobody was cutting the grass or shoveling the snow or taking out trash,’’ recalls Boston City Councilor Rob Consalvo. “Who wants to live next to that?’’

Foreclosures were being abandoned twice — once by the families who were evicted from their homes, and then by the banks and mortgage companies that had seized the properties. Lenders were taking homes at a rapid clip, but Boston officials often had trouble determining who was responsible for maintaining vacant properties. So Consalvo authored a municipal ordinance that requires mortgage holders to register foreclosures and vacant properties with Boston’s code enforcement department, and to inspect and maintain those properties monthly.

Consalvo’s foreclosure monitoring ordinance was the first of its kind in Massachusetts. It has served as a model for other cities’ attempts to combat foreclosure-driven blight. One of the cities following Boston’s example was Chicago. Chicago’s foreclosure monitoring program took effect in late November; by December, the city was defending the act in federal court.