City wants utilities paid on foreclosed homes
As more customers in Geneva lose their homes to foreclosure, the city of Geneva wants to make sure it isn't stuck with unpaid utility bills for those properties.
It's starting to ask foreclosing lenders for a $100 deposit to transfer service, and it is also presenting utility bills to them at real-estate closings if it can't get a deposit.
City employees have been noticing more and more foreclosures in Geneva -- either through people telling them as they close utility accounts, or by perusing the list of foreclosure sales on the Kane County Sheriff Department's Web site. Since February, they've counted at least 31, said Tracey Roiniotis, account receivables specialist. Many of these are addresses that she's seen before, as the city tried to collect on overdue bills from the owners.
Typically, lenders want electrical service to continue to the homes, even if they are empty, so that lights can be turned on for visitors and furnaces run.
Roiniotis believes that the city's bills for that may get overlooked in the shuffle of the paperwork accompanying the foreclosures, especially as the volume of foreclosures increases.
"It's just a way for us to control our bad debt," said Don Weis, the city's finance director. "We are very aggressive in our collection practices," he said, because having unpaid bills could force the city to raise the rates for other users, so that the city can pay its bills for supplying services.
When a home is about to change hands due to foreclosure, the city tries several ways to get its money.
Sometimes, the owner tells the billing department about the impending foreclosure when asking them to turn to close their account. Billing employees will then ask for the mortgage loan account number and the name of the lender foreclosing on the home. They then contact the lender to transfer the utilities to its name and find out where to send the new bills.
But if the person won't tell them the loan number (or they are getting the address from the sheriff's Web site), the lenders typically won't confirm that it is their account, due to privacy laws, said Roiniotis. In that case, the city may disconnect the utilities. When the lender wants the electricity and water turned back on, it has to pay that $100 deposit.
When the lender sells the property, the city determines if there is any outstanding balance, subtracts that from the deposit and refunds anything left over.
As for presenting unpaid balances at closings? That was the idea of a real estate agent, Roiniotis said.
This still doesn't cover the past-due bills of the owners of the homes being foreclosed. That bill follows them. It may be turned over to a collection agency. And if they try to sign up for utility service again at another Geneva address, they first have to pay off the old bill.
The city has about 7,800 residential customers and 2,000 commercial accounts.