Cities' Suits Targeting Foreclosing Lenders To Recover Costs Of Blighted Neighborhoods

The National Law Journal recently reported (at Law.com):

• [C]ities 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.

***

• [B]altimore took the unusual approach of filing suit in federal court under alleged Fair Housing Act violations. [...] John Relman, a Washington attorney, was hired by the city of Baltimore to file suit against Wells Fargo. He has received inquiries from other cities and expects more foreclosure suits to be filed in the future. "You can look at almost any of the major cities and see significant foreclosure trends, stretching across the country," said Relman of Relman & Dane. "Any city that has racially segregated housing patterns and high levels of foreclosure could wind up suing -- cities across the Midwest, cities in California. It's almost everywhere."

For more, see Empty Homes Spur Cities' Suits (Banks, lenders sued to recover costs) (if link expires, try here).neighborhood destruction from foreclosures zach