Lenders face fines if they allow foreclosed homes to become run-down

By
Real Estate Agent with Coldwell Banker

The California State Senate has just taken steps to end neighborhood blight caused by the lack of maintenance on foreclosed property.   Banks and mortgage companies will face fines of $1,000 per day if they allow foreclosed homes to become run-down and a source of neighborhood blight under a bill that passed the state Senate on Monday.

The state has one of the highest foreclosure rates in the nation, especially in the Central Valley.  In many cases, the vacant properties are overgrown with weeds and shrubs, and they have become magnets for squatters and vandals. Swimming pools often become stagnant, turning into breeding grounds for mosquitoes.

Under the bill by Senate President Pro Tem Don Perata, local governments could impose the fines on lenders after giving them 14 days' notice to fix the problems.

The bill, supported by consumer groups and local governments, and was sent to the Assembly on a 28-10 vote. Because it is urgency legislation, it would take effect as soon as it is signed into law.

"Having dilapidated or blighted ... unkempt properties in neighborhoods seems to have a spiraling effect," said Bill Higgins, lobbyist for the League of California Cities. "When they look unkempt, they seem to attract more squatters, crime."

The hardest-hit counties are Merced, San Joaquin, Stanislaus, Sacramento and Yuba, all in the Central Valley. The report showed one of every 737 Merced County residents and one of every 1,003 Sacramento County residents lost their home to foreclosure in March.

We have a house at the end of the block that has been abandoned for almost a year.  Our neighborhood is beautifully maintained and the house just stands out.  The people next door are trying to sell their upgraded, immaculate house and the sore thumb next door isn’t helping.

Even worse, in areas especially hard hit by foreclosures these abandoned homes are depressing the neighborhoods even more.

You can read the full article at

http://www.tahoedailytribune.com/article/20080429/Region/895562980/-1/REGION

Comments (6)

Cindy Jones
Integrity Real Estate Group - Woodbridge, VA
Pentagon, Fort Belvoir & Quantico Real Estate News
I hope they can make it stick.  I called a listing agent today about the exterior condition of his listing.  I have buyers with a ratified contract and I know the lender for the property has strict property reporting requirements.  He tried to play dumb and then I said no problem....you do know the field inspectors are coming to town next week don't you?  Oh I bet the place will be cleaned up now!
Apr 29, 2008 12:06 PM
Pam Joffe
Solaris Realty - Tampa, FL
Peter - That is great to hear. I wish we had the same law here, I have a property next door that is looking bad, it is in foreclosure.
Apr 29, 2008 12:18 PM
Justin Williams
Independent - Virginia Beach, VA
Loan Officer
Wow good post Peter. I do think lenders should hold some accountability if the house goes into foreclosure so it won't affect the rest of the neighborhood but on the same token, borrowers should be too...guess overall this is a great thing they are doing.
Apr 29, 2008 12:20 PM
Joel Weihe
Realty World Alliance - Wichita, KS
Helping you to use your VA home loan benefits
AWESOME and about time! Some of these are not just a blight but a hazard!
Apr 29, 2008 12:26 PM
Peter Wolf
Coldwell Banker - Valley Village, CA

Cindy - Relo has inspecotrs that will come to look at the house.  If it isn't up to par, good luck getting a new relo assignment.

Pam - I feel your pain.  Every time I look at this house down the street I get kind of pissed.  It was so beautiful when it sold.  I know that this isn't all the bank's fault, but they now own the property.

Justin - Again, while the borrower might have let it go, the fact is that the bank now owns it and they need to keep it up.  In reality, the bank will pass on those costs to their customers.

Shereee - The house down the street had a hydrant in front that was obscured by the weeds. Somebody hit the hydrant a few weeks ago. 

Apr 29, 2008 01:11 PM
M. Suzi Woods (Gravenstuk)
NOW Sharing the life and spice of the GC one day at a time - Grand Canyon, AZ
Suzi Woods, Prior Independent REBroker in MS
Peter, that is good news. I have many more thoughts, but I need to read the article and do some research before discussing.
Apr 29, 2008 03:40 PM