“This ordinance is critical to preserving the values of vacant properties and the surrounding properties,” said Woodstock Institute vice president Tom Feltner. “We believe that this proposal will introduce much needed oversight where some servicers have been unable or unwilling to be effective stewards.”

Feltner testified in favor of the ordinance, along with representatives from Action Now, Business and Professional People for the Public Interest, the Chicago Urban League and the Latino Policy Forum.  Recent Woodstock Institute research identified nearly 1,900 of these “red flag” properties in the City of Chicago which, as of October 2010, were vacant and stuck at some point in the foreclosure process.  The findings suggest that these red flag properties lack effective ownership, oversight, and accountability for their maintenance and security. A property that is in “red flag” status is also in danger of falling into disrepair and having a significant negative impact on the community.

The issue has garnered national attention, with municipalities looking for new tools to require mortgage servicers act as effective stewards of vacant properties, take steps to preserve their value, and ensure that maintenance costs are not passed on to the public.  Woodstock, using figures from a recent study, estimates that administrative costs of dealing with “red flag” properties in building court, securing the properties, responding to criminal activity, and potentially demolishing these properties will cost the City of Chicago an estimated $36 million.