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Sunday, May 03, 2009

Blight Laws and Foreclosed Properties

by Calculated Risk on 5/03/2009 11:49:00 AM

Here are a few stories on cities fighting foreclosure related blight ...

From the San Francisco Chronicle: Vacant foreclosed homes spawn blight, crime

Next door to Jeffrey Cash's tidy East Oakland bungalow sits a boarded-up foreclosed house that has been vacant for months, attracting locals who shoot dice in the driveway, smoke crack on the porch and dump debris in the yard, he said.
His situation is emblematic of a larger problem. The droves of vacant foreclosures nationwide and locally, many of them clustered in low-income areas, act as magnets for crime and create neighborhood blight, according to residents and civic leaders.
Many [cities] turn to anti-blight ordinances to try to force the banks that own the foreclosures to take care of them - mow the lawns, board up windows and doors - or face stiff fines if they don't. A California bill enacted in September (SB1137) allows municipalities to charge lenders $1,000 a day for failing to maintain foreclosed properties; some cities already have similar anti-blight provisions in place.
From the Boston Herald: City liens on lenders
City inspectors have slapped thousands of dollars in liens on 43 vacant or foreclosed properties blighting Hub neighborhoods to halt the national housing crisis from spreading more urban decay.

Among those being targeted are big banks, including Deutsche Bank and Wells Fargo, who have ignored their responsibility to maintain the seized homes. ...
From the WSJ: Banker: 'What'd I Do Wrong, Officer?' Cop: 'You've Got Algae in the Pool, Sir'
Officials at a Citigroup Inc. office in St. Louis placed a call to this desert town recently. The bank had caught word that Indio was coming after the lending giant with fines and threats of criminal charges. The offense: an algae-infested swimming pool at 79760 Eagle Bend Court.
[L]ast year, Indio passed a law that allowed it to charge banks with a criminal misdemeanor if they allowed a home to fall into disrepair.

"If I need to do it, I'll say, 'Mr. Bank President, if you don't come and take care of your property, we're going to come arrest you and take you to court in California,'" says Brad Ramos, Indio's long-serving police chief.
After the letters from Indio, Citigroup paid a $3,450 fine to Indio and sent a cleaning crew to fix the pool at Eagle Bend Court where Citigroup had managed the foreclosure process.
These fines will push the lenders to sell the properties quicker - or demolish them - or possibly not even foreclose on some properties.