The residential real estate landscape in Miami Gardens, Florida is dotted with bank foreclosed houses. Driving along city neighborhoods, one could not fail to see bank foreclosed houses in various conditions, with some languishing on the market since last year.
These properties have become blights to neighborhoods, became favorite haven of criminals and pulled down values of surrounding properties. To address the growing devastation brought by foreclosed properties, city councilman Andre Williams has proposed an ordinance that aims to penalize banks for refusing to provide loan modifications to distressed homeowners.
According to Williams, the city has a 70 percent home-ownership rate. Market data showed that 13 percent of Miami Gardens’ properties were foreclosed, making the city’s foreclosure rate the highest in Florida.
On its part, Florida has a 23 percent foreclosure and mortgage delinquency rates. According to industry analysts, many failed loans in Miami Gardens are subprime mortgages. Williams and other city leaders said that most of these failed loans were issued by banks on clients they knew could not afford to pay the monthly mortgages.
Williams believed that lenders should boost their loan modification efforts to help more troubled homeowners avoid foreclosures and remain on their properties. Normally, local governments do not have legal oversight over lending companies or banks.
But under the ordinance proposed by Williams, if the number of foreclosures initiated by lenders surpassed or exceeded the number of troubled loans they have modified, the city has the option to pull its business or accounts from banks that failed to close the gap between their foreclosure activity and loan modifications.
Williams pointed out that taxpayers helped banks get back on their financial footing so now it is time for banks to do the right thing.
Despite grassroot support, it is uncertain if Williams could gather enough votes from the council for the approval of the ordinance. Critics of the proposed ordinance said that it would not do the city any good if it alienates banks and discourage them from doing business in the area.
Miami Gardens officials said that they do not have any knowledge about the percentage of homeowners who are at-risk of foreclosures who received loan modifications. But the increase in foreclosure rates indicated that only a few troubled homeowners were able to save their properties from foreclosures.
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