MORTGAGE & FINANCE: Banks high on list of delinquent property owners

Yet both banks, two of the nation’s largest, question whether they are responsible for the properties and tickets. Wells Fargo representatives, for example, said they don’t even know if they own many of the homes; Wells Fargo could be servicing a foreclosure for another bank, or acting as a trustee for a giant pension fund that holds the mortgage.

Pat Greenhouse/ Globe Straff

“It is confusing as to why we’re being fined,” spokesman Tom Goyda said about citations issued to the bank.

The situation is another example of the problems created by the modern mortgage market, where loans are sliced, diced, and resold many times by banks and financial institutions, diffusing ownership and, ultimately, responsibility. Banks granted mortgages and sold them to other banks, which packaged them into securities  and sold them to investors, which then hired the same banks to collect the loans.

Now, with banks holding a record number of abandoned and foreclosed homes, many of those properties have become magnets for vandalism, arson, and drugs as banks and local officials try to sort out — and often dispute — who is responsible. Meanwhile, local government officials and taxpayers are left to clean up the mess.

“The problem is so big it doesn’t fit on my desk,” said William J. Good III, commissioner of Boston’s Inspectional Services Department. “I’ve never seen anything like it — maybe my mother once did during the Depression.”

Many of the foreclosed, and sometimes abandoned, properties are well-known to city inspectors, who trace ownership and issue citations for trash-strewn lots and overgrown yards. And the city often pays for the cost of renting Dumpsters or boarding up eyesores.

When code inspectors find a problem property — a neglected lot or an unshoveled walkway — they issue a ticket and leave it on-site. If it’s not paid within 30 days, the city mails a copy of the ticket to the owner of record, located through the city tax assessor’s office or Suffolk Registry of Deeds.

Wells Fargo and Bank of America rank among the city’s top 20 delinquent landlords owing unpaid fines to the city. Wells Fargo is second. Bank of America, which appears on the list under an employee’s name, is fifth.

Bank of America has nearly 100 unpaid tickets and about $35,000 in overdue fines, according to city records. The fines run the gamut, from $25 for overfilled trash bins to $2,500 for illegal dumping.

Bank spokesman T.J. Crawford said the bank had no knowledge of the delinquent fines.

“Bank of America employees are in regular communication with employees of the city’s inspection services department and are unaware of these fines,” Crawford said.

Good said he was puzzled by the bank’s response and had “an incredibly difficult time believing they don’t know they owe fines.” The top 20 delinquents are posted online. And late last fall, city employees bundled unpaid tickets and mailed them to the bank’s mortgage servicing department in Plano, Texas, he said.

“The whole problem on the bank’s side is their unwillingness to take responsibility for the problems,” Good said. “What we’re trying to do is get them to take responsibility.”

The city began aggressively targeting abandoned and foreclosed properties for enforcement in 2008, after passage of an ordinance requiring the owners of foreclosed properties to register them annually and provide contact information for a property manager responsible for upkeep. Earlier this month, more than 3,000 Boston properties were registered.

Wells Fargo, based in San Francisco, owes the city for 300 unpaid citations totaling nearly $46,000, according to city records. The tickets include fines for properties with overgrown weeds, unshoveled snow on sidewalks, and improper storage of trash. Most of the properties have multiple fines, including a property at 11 Elder St. in Dorchester that inspectors have ticketed 29 times for trash, dumping, illegal parking, and other unspecified violations.

Goyda, the Wells Fargo spokesman, said the bank was not responsible for some properties because the bank never had “any connection to the property whatsoever.” In other cases, the bank could not identify whether it was responsible. Each case, he said, would need to be examined individually.

“It’s a complicated process, a detailed manual process,” he said. “If we determine that we are responsible for any of the violations, we will be fully accountable for them and pay any required fines.”

Wells Fargo said it has paid the city $30,000 in fines since 2009; Bank of America did not disclose how much it has paid, but said it is responsible for maintaining 1,500 Boston properties.

The question of who holds a mortgage and, subsequently, a foreclosed property, has complicated efforts to resolve the foreclosure crisis and improve the struggling housing market. Since the housing boom went bust, a complex array of banks, servicers, and investors who bought mortgage-backed securities has thwarted homeowner attempts to negotiate payment plans, government efforts to modify loans, and bank efforts to sell foreclosed properties.

Several major banks mass-processed foreclosures using so-called robo-signers to officially take properties from delinquent homeowners, even though it was unclear whether the banks themselves could prove ownership. Bank of America temporarily halted foreclosures nationwide when the practice became public.

Good said once the properties are no longer moneymakers, banks have no financial incentive to maintain them. He said city workers are routinely called upon to board up the properties, or re-secure them, sometimes in the middle of the night. And though banks are required to hire property managers, some are located as far away as the Berkshires, making it impossible for them to respond to trouble quickly.

“They’re going to do the minimum,” Good said of the banks. “They have no interest in the property except as an investment.”

Boston City Councilor Robert Consalvo, who proposed the ordinance creating the foreclosure registry, said dilapidated houses can ruin neighborhoods, hurt property values, and crush a community’s spirit. In parts of his district, which includes foreclosure-riddled Mattapan, empty houses — including some with mosquito-infested backyard pools — are eyesores and health hazards.

“A bank is a homeowner like anybody else,” Consalvo said. “And they should be a good neighbor like everybody else.”

Megan Woolhouse Boston Globe April 15, 2011