City Passes Tough New Foreclosure Rules for Banks

The city council in Springfield, Massachusetts, unanimously passed two of the toughest anti-foreclosure laws in the nation this week, the Associated Press reports. The laws are designed to protect homeowners and lower the cost of the housing crisis on local government, supporters say.

“The Springfield City Council has given residents real, tangible tools to fight back against the damage banks have done to our city and our country as a whole,” says Sellou Diaite, a community activist in Springfield, said in a press release.

One law would require banks to post a $10,000 bond for every house they foreclose upon in Springfield. If a bank maintains the property until it is re-sold, it would get the money back. But if the city has to cut the grass, board up windows and doors, or do other work to secure the property, it would tap into the bond to cover those expenses.

The other law would require banks to enter mediation with homeowners to try and reach an agreement on payments before filing a suit in court to foreclose. Banks that foreclose first would be charged $300 a day.

The laws were supported by Springfield No One Leaves, a local organization of tenants and former homeowners who are living in foreclosed homes.

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The laws have yet to be signed by Springfield Mayor Domenic J. Sarno. While potentially controversial, the laws were “properly vetted with our legal team, are legally sound and will stand up in court if the banks challenge them,” Springfield City Councilman Amaad Rivera told WWLP, Springfield’s NBC affiliate.

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Image: Toms Bauģis, via Flickr.com