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Springfield, MA Holds Banks Accountable for Foreclosures

Springfield, MA Holds Banks Accountable for Foreclosures

Published: August 24, 2011
Councilor Amaad Rivera

Councilor Amaad Rivera celebrates with members of No One Leaves after Springfield’s passage of anti-foreclosure legislation.

Photo: AFSC / Jeff Napolitano

With a unanimous vote and a cheering crowd, the city council of Springfield, MA passed what is believed to be the strongest anti-foreclosure legislation in the country on August 22.   

AFSC worked collaboratively behind the scenes for months, reviewing precedents, advocating for strong legislation, and mobilizing popular support through the No One Leaves Coalition, which AFSC helped to found.  No One Leaves educates people about their right to remain in their homes as rent-paying tenants following a foreclosure, and has been working to stop foreclosures and evictions in Springfield. Lawyers for the city say the legislation is strong enough to withstand court challenges.

 “We hope the legislation passed by the city council will serve as a model for cities across the country and be a major step forward in holding the banks financially accountable for the foreclosure crisis they created,” said Sellou Diaite, leader of the Springfield Bank Tenants Association, which also works in coalition with No One Leaves.

The vote means borrowers in Springfield now have a right to good-faith negotiations with lenders, facilitated by a professional mediator, before facing foreclosure.  The mandatory-mediation ordinance, introduced by Springfield Councilor Amaad Rivera, imposes fines of $300 a day for up to 105 days for banks which  don’t comply.

Access to mediation may help families like the Dunwells, a hardworking couple who fell behind on  their mortgage payments after David Dunwell lost his job of 17 years.  David found new employment – but not until after the bank foreclosed.   The bank has gone to court to evict this family, despite the fact that it has no offers on the house and the Dunwells are now positioned to either buy back their home at current market value or continue living there as tenants paying a reasonable rent.   

When banks evict people rather than negotiate with them, it isn’t just one family that is affected.   While ordinary home owners are responsible for keeping their property up to code, banks have long gotten away with letting vacant buildings fall into disrepair.  When that happens, cities and towns foot the bill for burst pipes and other repairs necessary for neighborhood safety.   When vacant buildings attract criminal activity, communities  bear those costs too.

That’s why Springfield took action with a second ordinance, also introduced by Councilor Rivera and supported by No One Leaves, requiring banks to place a $10,000 bond with the city for every property put into foreclosure.  Once the building is occupied again, the bank can get its money back – minus a 5 percent administration fee and any maintenance and security costs incurred. 

Springfield faces the highest foreclosure rate in the state of Massachusetts, with between 20 to 50 homes going on the block in any given week.  Most families affected have lost their jobs or face extraordinary medical expenses due to a major illness.   This legislation offers hope to those people – and a model to others across the country seeking to address skyrocketing rates of foreclosure in their own municipalities.