By JIM BARON

PROVIDENCE — As she drives up and down the streets of her Central Falls district, Sen. Elizabeth Crowley says she can see five or six multi-family houses on each street that are boarded up and in foreclosure.

But the families who lived in those apartments are not gone from the city, Crowley noted: “They are living three to four families in a tenement. They are living room to room, that's more dangerous than anything else.”
If the tenants were allowed to stay in those apartments, she said, “Banks wouldn't be losing as much money on their mortgages, cities and towns would be collecting their taxes.”
Many of those buildings were owned by people who lived in one of the apartments, Crowley said, but “they were given a dream they couldn't keep up with.
“It's time for the banks to own up to their mistakes and take the time to work with the people who own the houses to keep everything going,” she declared.
Central Falls has a higher rate of property foreclosures than any other community in southern New England, said Providence Sen. Juan Pichardo. His city is third on that list. Pawtucket, Woonsocket and other area communities also rank high in foreclosure rates.
Crowley spoke at a Statehouse press conference Tuesday on a bill before the
Senate Judiciary Committee to establish a 180-day moratorium on foreclosures resulting from sub-prime mortgages. Sen. Charles Levesque, the prime sponsor of the bill, described that category of mortgages as “particularly nefarious” and “very predatory.”
“A lot of us, no matter what kind of financial wherewithal you have, did believe that the banks and other institutions that were loaning money were gatekeepers,” Levesque said, “and would not loan you money if there was not good reason to believe that you were going to be able to repay that money; it would be counter-intuitive.”
Many borrowers, he added, “were enticed and lured into particular obligations that they are now unable to sustain.”
Standing with co-sponsors of the legislation, Levesque explained that “we felt we needed to take action on behalf of all citizens of Rhode Island.”
The problem also affects people whose homes are not being foreclosed upon, Levesque said, “Because each foreclosed house has a damaging rippling effect on all of the houses in the community around it. All of us have seen the value of our own residences, in whatever neighborhood we live in, affected by the fact that in that neighborhood there is a house in foreclosure.”
Another provision in his bill, Levesque said, would also protect tenants involved in any foreclosure from being evicted, whether the mortgage was sub-prime or not. “As long as they are paying the rent, they will be allowed to stay in the house,” he told reporters.
Levesque, an attorney, said he can not guarantee that the bill would stand up in court if challenged, but he believes there is supportive precedent in U.S. Supreme Court cases dating back to the New Deal in the 1930s.
At the press conference, Levesque was asked if the bill would be a hardship on banks and lending institutions that are already experiencing hard times.
He said his sympathies lie with those who were lured into the bad mortgages. “For those who engaged in such practices, I have no sympathy. If there is a bad result for them, that is not a concern of mine.”
If banks and institutions that foreclose face liability issues because tenants are allowed to stay in a given home after it is taken over, Levesque said, “That's just too bad.”
Asked if his bill could face a veto by Gov. Carcieri, Levesque said, “That would be an unwise decision on his part for almost every political reason, humane reason or humanitarian reason. I would be interested in how he would justify it.”
Brenda Clement, executive director of the Statewide Housing Action Coalition, told the Judiciary Committee that “the foreclosure mess has had a tremendously negative impact on low- to moderate-income neighborhoods and communities.
“When the foreclosure bubble burst about a year and a half or so ago,” Clement said, “it wasn't a pretty little soap bubble that dispersed into the air. It was a big old sticky wad of gum that burst and spread and stuck to a lot of different things and caused lots of different problems in our communities.”
Clement said there were about 4,000 foreclosure actions last year in Rhode Island; 2,700 of them ended with the property being taken. The problem is continuing, she said: In January, there were 458 foreclosure actions, up 42 percent from the previous January.
Even so, it may not be easy to protect tenants in the event of foreclosure. James Hahn, a lobbyist for the Rhode Island Mortgage Bankers Association, said a lender “has no contractual relationship with a tenant.
“Lenders do not want to have a landlord-tenant relationship because that gives tenants legal recourse to challenge evictions and in many cases gives them an incentive to stop paying rent for that reason. In some cases, he noted, eviction proceedings can go on for months in court.”
He said it is easier to resell a property if it is vacant.
Jeff Taylor of New England Financial Services said that during foreclosures, banks that are part of his organization address eviction “on a case-by-case basis. It is not a universal situation. It depends on a particular property. We may work with the tenants in there,” sometimes helping them with relocation costs or to make arrangements for the upkeep of the property.
William Farrell of the Rhode Island Bankers Association said emergency legislation to solve the immediate problem is “a good place to start.” But he said he would not want to “burden the process going forward. We have had a process in place for 50, 60, 150 years; it's maybe not perfect but it seemed to do its job.
“Anyone who thinks this is not complicated, I don't think understands or appreciates the scope of the issue,” Farrell said.