Lenders responsible for care of foreclosed homes

Cities are starting to adopt ordinances holding the lender responsible for the blight caused by defaulted homes. Reasoning for the ordinances is very clear because when the bank takes over, the water is turned off, the electricity is turned off, and when you have the rain, suddenly you have 3 feet of vegetation in the front and backyard. With its overgrown weeds and broken fences, it is an open invitation to transients and people of shady character.

Ordinances normally require that a sign be posted on each property that identifies the manager and provides a 24-hour contact number to report problems and concerns. Another provision requires the owner to inspect the abandoned or vacant property at least monthly, when told by the city to do so, to ensure its upkeep. It is forcing mortgage companies to be more responsive. Stephen Leidner, vice president of the California Mortgage Association, said lending institutions support efforts to maintain foreclosed homes.

Owners who do not comply in a timely way could be subject to other ordinances, which will levy fines for code enforcement violations. If the city sends out a cleanup crews to do the work for the unresponsive landowners, they will place a lien on their property or properties to ensure payment for the work.

With the negative effect of foreclosed homes on neighborhoods, these ordinances are the right move for the neighborhoods. Cities such as Murrieta and Chula Vista have already adopted ordinances. The law requires lenders to pay a $70 fee and hire property management firms to take care of vacant houses. The first notice of default triggers the ordinance. Tracking down lenders isn't always easy, and, once found, some are more responsive than others. Hemet California will be the next city and I’m sure others across the country will start adding the same ordinances because this link between foreclosures and crime is more than just speculative. Studies show that even small increases in the number of foreclosures lead to higher levels of violent crime. Housing expert Dan Immergluck of the Georgia Institute of Technology and a colleague found that an increase of about 2.8 foreclosures for every 100 homes in one year corresponds to an increase in neighborhood violent crime of approximately 6.7 percent.

Unless cities want to board up foreclosed homes, they'll have to explore options like these cities. After all, they have owners and those owners should be held accountable.

By Daniel Doane

Hardmoney-DIRECT.com