N.E. cities grapple with foreclosures' fallout

Vacant homes a growing problem

As Boston moves to adopt an ordinance that would pressure mortgage companies to maintain foreclosed homes, other New England cities are taking stronger steps to encourage the resale of those homes.

The mayor of Providence has proposed a stick and a carrot: a punitive tax on homes left vacant for at least a year, and $1 million in home-improvement loans for residents who buy foreclosed homes.

Worcester plans to ask housing court judges to assign receivers who will supervise and maintain foreclosed buildings the city deems neglected, at the expense of the companies that own the buildings.

The programs are in addition to efforts by all three cities to prevent owners from losing homes to foreclosure.

Cities nationwide are increasingly pockmarked by foreclosed buildings. Mortgage companies say they are trying to sell the reclaimed homes and are not intentionally hoarding vacant properties. But in a growing number of cases, when the asking prices fail to attract buyers, companies are hammering boards over windows and doors.

The US Census Bureau reported in January that 2.2 percent of the homes in the Northeast sat vacant in the fourth quarter of 2007, the highest share since the government started counting in 1957.

Officials say the empty buildings are eyesores and hazards, offering easy shelter for criminal activities. Arson and accidental fires are relatively common. Neighborhood property values tend to suffer. And the homes are clus tered in the very areas where cities worked hard - and spent heavily - to encourage redevelopment during the housing boom.

"Abandoned homes, while they may be a good idea for investors, are having a direct impact on families and neighborhoods in this city," said Providence Mayor David Cicilline. He said the city has about 750 vacant homes, the most he can recall in almost 30 years of experience.

Last month, he submitted an ordinance to the city council that would fine the owner 10 percent of a building's value if it remained vacant a year after receiving a warning from the city. The punitive fine is intended to upend the traditional economic equation by making it cheaper to sell a vacant building, even for a loss, than to hold it and pay the tax.

Cicilline also introduced a loan program to encourage people to buy the homes. The city will make no-interest loans of up to $20,000 to help buyers repair the maintenance problems that often plague foreclosed homes. He said the city already has fielded about 100 inquiries about the loans.

Worcester city manager Michael O'Brien has created a task force to deal with abandoned buildings. In some cases, the city plans to ask judges to appoint receivers for buildings, generally property management companies. The cost will be billed to the owner through a lien on the property.

Mortgage companies foreclosed on 421 properties in Worcester last year, more than double the 190 foreclosures in 2006. City officials say the buildings often are neglected for months, abandoned by the previous owner and unclaimed by the new one. In some cases, tenants continue to live inside.

In late January, the first building identified under the program was condemned because of electrical problems. The city paid several hundred dollars to relocate a tenant.

"The cost of being proactive is going to be in the hundreds of thousands," O'Brien said, "But waiting could cost us much more" if neighborhoods begin to deteriorate.

In Boston, City Councilor Robert Consalvo introduced an ordinance last month that would require companies to register foreclosed properties with the city, identify who is responsible for maintenance, post their contact information on the property, and pay a $100 annual fee on each vacant home. The proposal has the support of Mayor Thomas Menino and is likely to be approved when the council next meets in two weeks.

Menino's office said several loan servicers already have agreed to post contact information on foreclosed buildings, and the industry has not expressed opposition to the rest of the city's plan.

Consalvo said he was open to stronger action if necessary, but first wanted to see this proposal take effect.

"I've always said this is going to get worse before it gets better," he said.

Binyamin Appelbaum can be reached at bappelbaum@globe.com.