The City Council on Wednesday scheduled a Nov. 12 vote on whether to force banks and mortgage lenders to pay a proposed $356 fee to cover inspections of vacant homes, as part of the city’s efforts to prevent blighted foreclosure properties.
The inspection fee is aimed at strengthening the city’s four-year-old Foreclosure Registry program, which was set up amid the nationwide foreclosure crisis to track such properties, and to deter banks and lenders from allowing the homes to become derelict. Due to a lack of resources, the city has not enforced the $1,000-a-day penalty against lenders that fail to maintain the homes.
The City Council is required to give the public a month to offer feedback on the plan to impose the inspection charge and assess a $250 fine for each day lenders or banks fail to pay the fee.
Lenders must file with the city’s foreclosure registry within 30 days after a default notice is issued on a property in their possession.
The city identified 805 non-registered properties with notices of default from Jan. 1 to May 31, city housing officials said, although 223 of them did not need to be registered because they were sold to a third party.
Under the proposed ordinance, the Housing and Community Investment Department would collect the inspection fee from lenders when a property goes into default or foreclosed status and reimburse the Department of Building and Services, which would conduct the inspections.
The issue drew support today from members of the Alliance of Californians for Community Empowerment, a group that helps people navigate the foreclosure and loan modification process.
“We’ve got to make these banks pay. That’s what we ought to do,” said Beverly Roberts, a member of the group.
South Los Angeles resident Angelina Jimenez, speaking to the City Council through a translator from ACCE, argued the fee is necessary because banks “should be held accountable for maintaining these vacant houses, because they’re the ones that foreclosed on people and removed the homeowners or the families from the house.”
Ruben Gonzalez of the Los Angeles Area Chamber of Commerce said the businesses he represents are in support of reducing blight, but are concern the inspection fee could punish banks and lenders “whether they are being a good citizen or not.”
He urged the council to rely on a “responsive” process in which members of the community report problem properties to the city, instead of the city tracking all foreclosures.
Councilman Gil Cedillo, who spearheaded the efforts to revive the 2010 foreclosure registry program, said the city went through an “incredible” housing crisis that resulted in 35,000 foreclosed homes.
Through months of effort by the City Attorney’s Office to come up with solutions to possible legal challenges to the fee, “I think we’ve found a way for us to move forward with what we think is the right thing to do,” Cedillo said.
— City News Service
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