Lisa Simpson
Jun 9,2010
In: Foreclosure

Banks Being Penalized for not Maintaining Foreclosed Units

If neighbours neglect their property and allow weeds to grow as well as raccoons to breed what should be done? The first thing is to talk to the neighbours and if that does not have any effect then other neighbours can club together and go to the authorities relating to control of animals and enforcement of codes. In other words all the others will behave like good neighbours.

But what will happen if the neighbouring property happens to be owned by a mega bank? This is the position many residents of California and Los Angeles are facing since the real estate market began to crumble two years previously. The banks have been weighed down by such a staggering number of foreclosures that they are at sea and do not know what to do. They do not have the infrastructure to maintain the huge number of properties they have taken over. Many of the units are pock marks on the locality and running to seed with garbage and graffiti left behind by vandals and previous frustrated owners. Criminals have moved in.

The situation is particularly bad in North East Valley compelling the residents to seek help. Last month the City Council decided to take action by mandating registration of foreclosed units through – Foreclosure Registry Program.

Unfortunately the plan seems to be just another money making spindle that hardly makes a dent on the problem. The city is hungry for cash and hopes to raise nearly $5 million from charging fees on the banks that are bad neighbours. The worker’s unions of the city have been enthusiastic about the programme because money coming in for this programme would mean lesser number of layoffs.

As per the programme the banks owning foreclosed units would have to enroll themselves and deposit fees worth $155 per property as registration fees. If banks fail to do so they would be penalized by having to pay $250 each day. If a bank is seen not to be maintaining the unit then the city would collect each day $1,000.

These punitive actions might result in more lawns being mowed but if the banks were basically worried about each of the units they had foreclosed upon, they would not have allowed these to become derelict. It is gnawing into the resale value of the house.

There is an underlying hope among all that the programme would bring about an end to the foreclosure blight. But there are suspicions that apart from opening up a revenue collection venue nothing more would result from it.

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