Bank fined $235,000 in Prov foreclosure

PROVIDENCE, R.I. (WPRI) –A vacant two-story home in Providence’s Silver Lake neighborhood has become such an eyesore that not even the bank wants anything to do with it.

Empty for over a year, the first floor windows at the 223 Roosevelt Street property have been replaced with boards, old phone books have stacked up on the porch and the driveway has been transformed into a dumping ground for Heineken bottles and broken television sets.

The property is one of the nearly 2,000 city homes and 7,000 homes statewide that have entered the foreclosure process since 2009, according to figures released by HousingWorks RI, an affordable housing advocacy group.

• Target 12: Run-down homes
• Interactive: Foreclosure map

But while the vacancies pile up, critics say banks have no incentive to complete foreclosures because they would become responsible for the property. 

“It’s like throwing bad money after bad money,” Corey Allard, an attorney who specializes in fighting foreclosures, told WPRI.com. “They don’t want to be shelling out to fix properties they’ve already taken a loss on. These are $200,000 and $300,000 mortgages that are now worth $100,000. It doesn’t make any economic sense.”

Allard has spent the last year bringing foreclosure cases to federal court and forcing banks to enter mediation with his clients. In many cases, Allard said just contacting banks or loan servicers is easier said than done.

“The problem for the city or the Housing Court is that they have the same problem contacting the banks that the borrowers had,” Allard said. “They’re biting out of two sides of the same apple.”

At the Roosevelt Street home, which city records show is now worth $124,700, Providence Housing Court Judge Jorge Elorza had to fine the Bank of New York Mellon Corp. $235,000 over the last year simply to get anyone’s attention.

“A fine of $150,000 is imposed against Bank of NY Mellon for its repeated disregard of a duly served subpoena and of numerous court orders,” Elorza wrote in a court order on Jan. 29. “The court shall issue a body attachment for Bank of NY Mellon’s chief executive once it determined whom the appropriate person is.”

Elorza had previously issued fines of $75,000 and $10,000 against the bank. Bank of New York Mellon did not respond to a request for comment. The judge has also fined Deutsche Bank and Bank of America $85,000 apiece.

When a representative finally appeared in front of Elorza this week to discuss the Roosevelt Street home, they could not answer why previous court orders were ignored. Elorza demanded that the company clean up the property.

“Being a vacant property, this home has become an eyesore for the neighborhood,” Elorza wrote in his court order.

And those eyesores continue to add up. According to a report issued by HousingWorks RI, more than 170 Providence homes were foreclosed on in the first six months of 2012. Across the state, 25% of the foreclosed homes in the first half of 2012 were multi-family properties, affecting 655 households.

Allard said the mediations have helped some families, but said the problem goes back to banks.

“They should have just negotiated with people in the first place,” Allard said. “Then we wouldn’t have the problems we’re having today . "

Dan McGowan ( dmcgowan@wpri.com ) covers politics, education and the city of Providence for WPRI.com. Follow him on Twitter: @danmcgowan