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Abandoned homes a community nightmare

Cities, states experiment with how to force banks to clean up rotting properties.

By Karen Datko Jul 14, 2010 12:10PM

This post comes from Marilyn Lewis of MSN Money.


Health officials in Orange County, Calif., are pondering whether mosquitoes breeding in the 6,000 to 7,000 stagnant swimming pools in abandoned homes there are helping spread the deadly West Nile virus.

The bugs pick it up from birds and pass it to humans, says The Orange County Register, noting elsewhere that distressed homes make up 31% of all properties for sale in the county.


All across the country, abandoned homes -- a legacy of the economic and mortgage meltdown -- are creating blight and trouble for neighborhoods and cities.


The issue has been festering for a while. More than a year ago, The Washington Independent reported:

Banks that received government bailout money are taking heat for spending billions of dollars on bonuses, executive pay, and lavish outings. But there's another outrage that Washington seems to be missing: the growing number of bank-owned properties in foreclosure scarring neighborhoods across the country.

With no federal legislation to manage the problem, communities are experimenting with ways to force absentee owners to take responsibility for the vacant homes.

Many of the empty homes are owned by lenders and banks, which seized them through foreclosure. The city of Los Angeles -- home to 27,000 foreclosed properties -- has started a "foreclosure bank registry" to hold banks accountable. The law requires lenders to register their properties so the city can identify and contact owners of derelict buildings.


The Fiscal Times explains:

Passed in May, LA's foreclosure bank registry program requires banks to maintain foreclosed properties or face fines of $1,000 per day, up to $100,000 a year, per property. The new ordinance aims to protect neighborhoods from becoming blighted as a result of property abandonment.

The California Mortgage Bankers Association is complaining that the LA law forces banks to do redundant paperwork, since records of property ownership and transfers already are kept by the county.

But as those records aren't up-to-date, the new law plugs an information gap and lets city officials keep track of fast-moving foreclosures, says this article in

New rules mean that officials can hand out fines of up to $100,000 against financial institutions that seize homes and allow them to fall into disrepair. They also mean that lenders, who often don't consider the properties their responsibility until the title is transferred, are now responsible as soon as they issue a default notice.

Neighborhood activists in LA are asking residents to use the city’s 3-1-1 hotline to report the eyesores. Residents are accustomed to dialing 3-1-1 to alert city offices to nonemergency problems like neighbor noise, garbage pickup, fallen trees, failed traffic signals and potholes. (See if your town is on this map of U.S. cities with nonemergency 3-1-1 phone service.) 

To get banks to clean up vacant properties, some communities are trying carrots, but most appear to be using sticks. (See stories about efforts in New Haven, Conn; Cleveland; Lorain, Ohio; Boston; and Norfolk, Va.)


The Pennsylvania Senate has adopted an extremely tough stance. The Neighborhood Blight Reclamation and Revitalization Act, according to, would, if it becomes law:

  • Let the state extradite out-of-state owners of deteriorated property to Pennsylvania so they can be prosecuted in criminal courts.
  • Let cities slap a lien against an owner's total assets, not just the problem property.
  • Let cities deny certain permits and approvals when owners are behind on taxes or haven't brought property into compliance with city codes.
  • Set up housing courts and training for judges.

The free market also has delivered at least one solution: -- a site "built for you -- the neighbor who lives amongst these properties." It lets neighbors call out "the most offensive properties" and their owners by name and address.


Users post comments and photos of neglected properties in their neighborhoods, using symbols to designate a property's worst problems, like "garbage," "black lawn," "brown lawn," "green pool" (nasty, slimy, green pool water) and "holiday lights" (still on).


The site also ranks banks by the number of neglected properties the site says they own nationwide. Topping the roll of bad guys is Fannie Mae, which insures mortgage loans.


LenderOffender would seem also to offer plenty of opportunities for abuse. But the site says property owners can petition to be removed from the list if they've been "mistakenly reported" or if they've cleaned up a property that's listed on the site.


And -- this is the Internet, after all -- LenderOffender also hawks "products and opportunities" for those looking to invest in bank-owned real estate. The "Street Cop Millionaires Guide To Flipping Property," for example, offers "How A Broke, Discouraged Street Cop Became A Millionaire In Real Estate And How You Can Do It Too ... In Less Than 3 Hours!" Buyer beware.


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