Following the lead of its neighbors, Warwick gave first passage to an ordinance that city council members hope will work to stem foreclosures in the city at Monday evening’s meeting.

“When I checked the number of foreclosures I was simply shocked and I said to myself ‘something needs to be done about this’,” said Helen Taylor (Ward-3).

“This forces the banks and the lenders to sit down with the homeowners to negotiate with them to refinance or lower the price of the monthly payments that they’re required to pay.”

Warwick had 806 foreclosure initiations, from April to October of last year, making it the top city in the state for initiations by percentage of population, about one for every 100 people according to recent data provided by the Warren Group and Rhode Island Housing. Yet of those 806 initiations over that time period, just 219 were actually foreclosed upon.

According to a recent report by HousingWorksRI foreclosures affect not only the house foreclosed on, but also the whole neighborhood. Property value for a house within one-eighth of a mile to a foreclosed home decreased by 0.9 and 1.136 percent; in low- and moderate-income neighborhoods the value drops between 1.44 and 1.8 percent.

Council members, who voted 8-0 for the ordinance, which mimics a measure recently passed on Providence, would reduce that number even further.

The ordinance forces the borrower being foreclosed upon to seek counseling from an authorized agent of the federal Housing and Urban Development (HUD) agency. The ordinance sets up a timeline that must be followed, which would have the process concluded within 60 days.

The process does allow for foreclosures to take place, but only after a good faith effort at resolution has occurred.

Bill White, president of Coastway Community Bank, says that’s already happening. He observed it is not in the bank’s interest to foreclose, as the bank ends up selling the property at less than what it is worth.

“When talking about some of the larger out of state banks maybe they aren’t going through the process, but we bend over backward. Where people have had extenuating circumstances we modify payments. It’s our best bet to get paid,” he said.

“I don’t see it as a productive step,” he added. White said legislators are “making judgment we haven’t done that (attempted to keep people in their homes) and we have. I’m sure it is well intentioned but speaking for Coastway it misses the mark.”

Under the proposed ordinance, the lender fails to comply with the law it will be fined $2,000, and will be unable to list the property in the Land Evidence Records.

“We’re trying to take a proactive approach. We’re keeping families together and in their homes,” said Councilman Joseph Solomon (Ward-4).

“We don’t want to be a community of boarded up houses.”

City Clerk Marie Ahlert however said while the legislation is indisputably well intentioned, she has concerns. During the city council ordinance committee hearings, Ahlert said it could become very difficult for lenders doing business in Rhode Island to deal with piecemeal regulations enacted by cities and towns throughout the state. A better approach, she said, would be to wait and see if the state intended to enact a unified approach.

There is a currently a piece of legislation in the statehouse similar to what Taylor has proposed.

Solomon, however, said the city can’t afford to wait.

“It reminds me of the old commercial ‘you might be a winner’,” said Solomon.

“Yes, the state might act, but we can’t take the chance waiting.”

Mayor Scott Avedisian, however, suggested yesterday that a veto could be in the wings, should the council give the current version of the ordinance second passage.

“The City Clerk has mentioned to me that she has some real concerns about the resolution pending before the City Council relating to foreclosures,” said Avedisian in an email.

“I am hopeful that the City Council will listen to her concerns and make amendments to the legislation. If they do not, I will confer again with the Clerk before deciding whether or not to veto the legislation.”

Neighboring Cranston passed a similar piece of legislation, which Mayor Allan Fung vetoed. The council in that city easily overrode the veto.

Taylor however, said it would be “very poor judgment” to veto, or vote against the ordinance.

“I have no idea why the mayor would veto this because it benefits the homeowners and households in our city,” said Taylor.

Despite voting for the ordinance, councilman Ray Gallucci (Ward-8), said he believes it will be difficult to enforce.

“I think it’s a good piece of legislation, but if we can’t enforce it, what good will it really do. I’m hearing Providence is having some trouble enforcing it,” said Gallucci.

With reports from John Howell