Los Angeles Ordinance Aims to Charge Foreclosure Fees to Banks
On November 12, Reuters released an article discussing the passing of a foreclosure registration amended ordinance by the LA City Council.
Please Note: As previously reported, the Los Angeles City Council recently gave its initial approval to a measure that would place a $356 inspection fee on every bank-owned home in the city. The Foreclosure Registry Program/Notice of Default (NOD) to Real Estate Owned (REO)/Amendment has now passed final council approval.
Los Angeles ordinance aims to charge foreclosure fees to banks
LOS ANGELES (Reuters) – Banks and other lenders that own foreclosed homes in Los Angeles would have to pay fees to fund building inspections under an ordinance passed on Wednesday as part of an effort to combat blight caused by abandoned and neglected properties.
If the measure is signed by Mayor Eric Garcetti, Los Angeles would become the largest U.S. city to implement such fees, which aim to compel banks to maintain properties they seize from homeowners.
“This inspection fee will give us enforcement measures to prevent blight in our city,” Councilman Gilbert Cedillo said in a statement. “This ordinance will continue to hold the banks accountable for foreclosed homes that remain empty in our neighborhoods.”
Although California’s housing market is recovering, Los Angeles still grapples with foreclosures. There are nearly 8,000 foreclosed properties in the city, and the Housing and Community Investment Department is trying to verify the status of about 1,600 others that have received notices of default, a spokeswoman said.
Los Angeles has struggled to track foreclosed properties despite creating a registry in 2010, and officials have had difficulty forcing banks to maintain them.
Under guidelines passed on Wednesday, the city would join Las Vegas, Chicago, Oakland, California, and other cities in assessing fees to help keep track of foreclosed properties and forestall blight.
Banks and lenders would have to pay $155 annually to register each foreclosed property, plus a one-time inspection fee of $356. Those who did not pay after 30 days would be charged $250 a day, up to a maximum of $100,000.
The money would go to the Housing and Community Investment Department, said a spokesman for Cedillo, and be distributed to the Department of Building and Safety to conduct code-violation investigations.
Opponents said the measure was a money-grab by the city.
“Most of these houses are not in a bad situation, said Stuart Waldman, president of the Valley Industry and Commerce Association. “We feel like the city is using this revenue to fund staff positions.”
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Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders, and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally.