Hurting housing

Among Chicago’s lasting gifts to Southern Nevada: disgraced former University Medical Center CEO Lacy Thomas and Erin Kenny, the former Clark County commissioner who was so corrupt she made Boss Tweed look like Tim Tebow.

A recent addition to the list: Chicago’s vacant-house ordinance, which was not only copied by the Las Vegas City Council, but made even harsher by promising jail time for bankers and landlords who don’t maintain distressed homes here.

As with Mr. Thomas and Ms. Kenny, Las Vegans would have been much better served applying a bit of scrutiny to the Windy City’s offering. The housing law is not only a poorly conceived attempt at scoring political points, it’s an invitation to costly litigation and another anchor on a housing market that still hasn’t found bottom.

The federal government sued Chicago this month, seeking to strike down the ordinance, which requires “mortgagees” to register vacant properties with the city at a cost of $500 apiece, then maintain said properties lest they face fines of up to $1,000 per day for failing to do so. The ordinance applies to all parties with a financial interest in the home: lenders, mortgage servicers, even federal housing black holes Fannie Mae and Freddie Mac. The lawsuit notes that the federal government can’t be told what to do by the city of Chicago, and that fines against Fannie and Freddie are, in fact, fines on U.S. taxpayers.

A recent Wall Street Journal editorial points out other obvious problems with the Chicago and Las Vegas codes: They make financial entities subject to the law even if they haven’t foreclosed on a home, and even if they don’t hold the title. The ordinances effectively order bank employees to trespass on private property to fix broken windows, pull weeds and repaint. Just because someone isn’t paying their mortgage doesn’t mean they’re not living there anymore.

Scores of run-down, ransacked, empty homes haven’t been foreclosed — it can take more than a year to accomplish that from the time of default. Nevada’s foreclosure mediation law drags out the process, and Nevada Attorney General Catherine Cortez Masto is cracking down on lenders that try to quickly move their documents through the courts. So banks are damned if they try to bounce a neglectful, nonpaying borrower from his house too fast, and they’re damned if they need 18 months to get all their T’s crossed and take back a property.

All this imposes huge new costs on lenders, thereby making mortgages more expensive for anyone interested in moving into neighborhoods to stabilize plummeting property values. And just how police will determine which bank workers go to jail because of a home’s dead landscaping isn’t remotely clear.

If the Las Vegas City Council doesn’t pull back its version of Chicago’s ordinance, it can expect to find itself in court — and you’ll get the bill.